WASHINGTON (8/6/12)--When the bank lobby calls on Congress to tax credit unions, they are really demanding that Congress do away with credit unions, Credit Union National Association (CUNA) President/CEO Bill Cheney said in a letter to the chairman and ranking member of the House Ways and Means subcommittee on oversight.
Cheney in the letter noted that the bank lobby "absolutely refuses" to accept the fact that the credit union tax status has always been a function of the ownership structure of credit unions.
"It has never been about the power or mission of the credit union," Cheney wrote to Chairman Charles Boustany (R-La.) and Ranking Member John Lewis (D-Ga.).
Cheney's letter came in response to an American Bankers Association (ABA) statement submitted for the record of a July 25 tax hearing. The ABA in the statement asserted credit unions were created to "service people of modest means," that credit unions are "complex," and that credit unions are "indistinguishable from banks."
Credit unions serve all of their members regardless of their means, Cheney said. "'One member, one vote' is a critical component not only to the membership structure but also to the credit union philosophy; a member of greater means has just as much right to the use of the credit union as a member of small means. It's because of this ownership structure that Congress granted the tax status and has reaffirmed it several times."
And, like other financial institutions--including banks--credit unions have evolved over time. "Indeed, if credit unions were not evolving to meet the needs and demands of their members in the 21st century, one might very well call into question whether they were fulfilling their mission."
Banks are squarely wrong to assert credit unions are indistinguishable from banks, he added. "For all of the evolution and development that has taken place over the last century, one thing that has remained the same is the credit unions' cooperative ownership structure and democratic governance. The members of the credit union own the credit union; a bank is owned by its shareholders. This means what motivates credit union leaders and bank executives is different, and it boils down to this: credit unions use members' money to help members; banks use customer's money to make money for shareholders."
Cheney added that there is irony in bank complaints that credit unions have evolved into "complex and full service financial institutions.
"[Banks] think they are making the point that credit unions are not fulfilling their mission," Cheney wrote. "But in reality, they are making the point that credit unions are. Congress provided a federal charter to credit unions to promote thrift and make credit available at a time when the banks were not doing that. They established credit unions to give people the ability to do business with a financial institution and also have a voice and a vote in how their money was to be used by the institution," he said.
For the full CUNA letter, use the resource link.