Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

CU System
NEW: Report Debunks Myth Of The Uneven Playing Field
FEDERAL WAY, Wash. (Filed  6/7/13 at 1:05 p.m. CT)--All of the major claims made by critics of credit unions in terms of uneven playing field  are unsubstantiated, says an economic analysis released today. What's more, there is "no evidence that state and federal tax policies give credit unions unfair competitive advantages over banks."

"Credit Unions vs. Banks: The Myth of the Uneven Playing Field" is authored by

ECONorthwest's Randall Pozdena, managing director and senior economist, and Michael Wilkerson, senior economist.  The report was commissioned by the Northwest Credit Union Association.

The  independent economic analysis was commissioned after bank trade associations in Oregon and the U.S. lobbied to eliminate not-for-profit credit unions' tax-exempt status in the state and in Congress.

"In our view," wrote the authors, the difference in organizational forms of credit unions and commercial banks, the asymmetry of powers enjoyed by the respective institutions, and the trends in credit union development are not consistent with the claim that credit unions enjoy unfair competitive advantages."

In the study, they reviewed the theory and historical performance of credit unions, then statistically tested where there is a comparative performance difference based on the adoption of the community common bond membership criterion, or credit unions' exemption from corporate income taxation.

"All the major claims made by critics of the credit union industry are unsubstantiated," said the report.  Contrary to the claims of banks, the study concluded:

  • Credit unions' share of consumer deposits have not been growing for more than a decade.
  • There is no evidence that either the community bond designation or corporate tax policy has had any positive statistical effect on deposit or institution share trends.
  • Credit unions' growth and consolidation is mainly a response to the risk and inefficiency of reduced scale revealed by credit union liquidations in the 1970s and 1980s--not a consequence of changes in common bond designation or tax policy.
  • Untaxed credit union net income is not going to higher credit union labor compensation.
  • Consistent with the theory of cooperative banking, credit unions continue to provide superior deposit and loan rates, in addition to greater protection from portfolio risk relative to outside-ownership commercial banks.
  • The channeling of free cash flow to savers and borrowers means that free cash flow does not go untaxed.
  • Credit unions have not abandoned small account holders.
For the full report, use the link.
RSS print
News Now LiveWire
September is National Preparedness Month. Read how your CU can get ready in #NewsNow #NPM @AgilityRecovery @Readygov
21 hours ago
Bay Area #creditunions featured in @SFBusinessTimes article http://t.co/SE7W81Ulia
23 hours ago
#NewsNow: 8 CU advisory board, new senior leaders named at @CFPB. http://t.co/EPKgHEDRRN
1 Day ago
#NewsNow: @FTC warns of government impostor scams. http://t.co/MMWBOcrqwJ
1 Day ago
Registration open for @CUNAMutualGroup's Discovery Conference #NewNow http://t.co/CATF0j9ct1
1 Day ago