BISMARCK, N.D. (2/21/13)--The credit union difference and the Credit Union National Association's role in promoting it and other credit union legislative issues were discussed Tuesday by CUNA President/CEO Bill Cheney, who was a guest on a Credit Union Association of the Dakotas-sponsored "Legislature Today" podcast.
Cheney said CUNA is trying to get credit unions exempted from regulations in many cases because "no one has to protect consumers from credit unions," he said, quoting former U.S. Rep. Barney Frank.
Maintaining the federal income tax exemption for credit unions is on top of CUNA's list of priorities this year, along with regulatory relief and some charter enhancements, Cheney added.
"A tax on credit unions isn't a corporate tax, but a tax on 96 million working credit union members," he said regarding the credit unions' exemption. "Congress, I believe, doesn't want to tax middle-class Americans."
Show host Dale Wetzel asked Cheney about current credit union national membership trends.
"Credit unions have seen substantial growth in the past year sparked by Bank Transfer Day … on Nov. 5, 2011," Cheney said. "Bank Transfer Day shed light on credit unions and that they don't charge all the fees that banks do. It resulted in lots of media, consumer and small-business interest in credit unions. In the past 15 months, credit unions have seen the most growth they have in the past 15 years."
Since BTD, two-and-a-half million people have joined credit unions, and three million checking accounts have been opened at credit unions nationwide, he said.
Why? "Because credit unions are a better deal," Cheney explained. "The growth is continuous and is accelerating." Word of mouth and social media have helped spread the word, he added.
What makes the credit union option truly different is that every member is on equal footing--with one member, one vote--so everyone has a say in the operation of a credit union and how it treats its members--which is different than how banks operate, Cheney explained.
When asked about the financial shape of credit unions today, Cheney replied that while the financial crisis was tough on everyone, credit unions went into it well-capitalized, didn't engage in predatory lending practices and did not make loans that contributed to the crisis. Therefore, credit unions weathered it better than most financial institutions. Since then, they have climbed back on their feet with a quick recovery, he added, citing a key statistic
"Credit unions saw an increase in business lending of 45% during the financial crisis on a national level, while banks decreased lending by 15%," Cheney said. "Credit unions filled a void when they were most needed by consumers and small businesses."
Regarding new financial regulations, Cheney said their effects on credit unions have been huge. "Every dollar a credit union has to spend in compliance costs is a dollar they can't spend to help members," he explained. "It is a costly and serious issue."
To hear the podcast, use the link.