WASHINGTON (9/5/13)--While credit unions score with their grassroots "Don't Tax My Credit Union" campaign as federal policymakers debate tax code reform, the banks are re-circulating their dank and tired arguments to promote a new tax on credit unions and their 97 million members, Paul Gentile, Credit Union National Association executive vice president of strategic communications and engagement, pointed out Wednesday.
"A 'new' bank study on the issue just re-hashes tired arguments that credit unions have already refuted," Gentile said, and warned noted that report authors are "advocates of the big banks--and paid by bankers--which are at odds with credit unions."
Gentile suggested that any reader of the report should be aware of the following areas of misinformation:
The report targets credit union growth. However, in reality credit unions have maintained an approximate 6% market share of depository institution assets for the past few decades. Banks have $15 trillion in assets and their assets grew by more than $500 billion this past year. Each of the four largest banks have more assets than the entire credit union system.
The report alleges credit unions are focusing on "higher-income" consumers. In fact, while member growth as a percentage of population has been very strong (30%), credit union share of depository assets has stayed steady, indicating credit unions are certainly not catering to the wealthy as the report indicates. Nationwide, fully 42% of credit union branches are located in Community Development Financial Institution investment areas, compared to only 32% of bank branches in such areas.
While the report criticizes credit unions for competing "head-to-head" with banks, all consumers benefit from that competition with banks. Credit unions provide $6 billion annually in benefits to members by providing better rates and lower fees than banks. Even nonmembers benefit--to the tune of $2 billion annually--because in markets where credit unions are strong banks are forced to be more competitive.
While the report tries to argue that credit unions are "indistinguishable" from banks, credit unions are distinct by nature of their very structure. No matter the size of a credit union, the non-profit structure maintains the same: They are member-owned, democratically governed, not-for-profit cooperative financial institutions generally managed by volunteer boards of directors. They do not do not pay dividends to stockholders, generally do not compensate their directors, and do not compensate senior executives as highly as banks.
"One of the biggest things that the report tries to ignore is that their cries to tax credit unions is really a call to tax 97 million Americans and that would hurt those who can least afford it--hard-working Americans," Gentile pointed out.
He added, "While banks enjoy record profits year after year, credit unions are giving back to members everyday in the form of better rates and lower and fewer fees.