From the Cheap Seats (Editorial)

The dispute between a coalition of banks and Arkansas Federal Credit Union that Arkansas Business first reported in Whispers four weeks ago finally found its way onto the front page of the Arkansas Democrat-Gazette last week.

Let’s see if we can fairly summarize the debate: AFCU was originally included in the group of banks that bid to lend money to the Little Rock Tech Park. The Arkansas Bankers Association talked the banks into tossing AFCU out of the club — but not until after the bid deadline had passed, so AFCU couldn’t make its own competing bid.

The ABA argues that credit unions are supposed to serve small employee groups, which the Tech Park isn’t, and that a government entity like the Tech Park shouldn’t be paying interest to a tax-exempt credit union.

AFCU argues that the bankers played dirty by waiting until they would have no (presumably lower-priced) competition before giving the credit union the old heave-ho.

The Tech Park says it got one bid and wasn’t involved in deciding which lenders made the bid.

Here’s how it looks from the cheap seats:

• Credit unions (possibly because they did a better job of lobbying) have a perfect legal right to make this kind of loan. Bankers wish it weren’t so, but wishful thinking is not good public policy.
• AFCU didn’t seem concerned about competitive bids when it was part of the in crowd.
• Taxpayers got the shaft. When competitors don’t actually compete, the consumer never wins.

Rebidding when the conflict became apparent would have been ideal, but it may be too late for that since the terms of the winning bid are now public knowledge. We taxpayers lost this battle, but we could end up winning the war if this skirmish results in more competitive bidding on future borrowing by public entities.