GAO modest means study not conclusive, says CUNA
WASHINGTON (12/4/06)--The Credit Union National Association (CUNA) said the Government Accountability Office (GAO) report released Friday on credit union service to people of modest means does not conclude credit unions are doing anything less than what Congress intended they do: Serve middle-income, working men and women.
The GAO made no legislative recommendations in the report, which the House Ways and Means Committee requested in the wake of that panel's hearing on credit union tax status in November 2005. The report suggests the National Credit Union Administration (NCUA):
- Systematically obtain information on income levels of credit union members;
- Monitor the progress of credit unions serving low- and moderate-income individuals;
- Take action to ensure information about federal credit union executive salaries is available to members and the public; and
- Explore and periodically review the benefits of expanding NCUA's three-seat board to five.
CUNA President/CEO Dan Mica said although the GAO report noted credit unions serve a lower proportion of low- and moderate-income members than do other financial institutions, it also indicated credit unions are subject to numerous field of membership restrictions.
"The effect of these restrictions results in credit unions serving a greater proportion of moderate and middle income members than do banks," he said. He also pointed out the GAO's report acknowledges inadequacies in the data it used to assess the income of credit union members.
Mica emphasized the GAO report provided an extensive analysis of the more attractive deposit and loan rates that credit unions pay and charge compared to similar-sized banks, which he said "strongly supports CUNA's view that it is indeed the members who benefit from credit unions' not-for profit, tax-exempt status."
Unlike a recent NCUA report on credit union service to members, the GAO report was intended to have a broader scope embracing not only credit union service to members of modest means, but also applications of Unrelated Business Income Tax (UBIT) to credit unions, NCUA governance issues, and more. The IRS is expected to release UBIT guidance during the first quarter of 2007.
Retiring House Ways and Means Committee Chairman Bill Thomas (R-Calif.) in a four-paragraph statement Friday called the GAO report "balanced," but noted that "many questions remained unanswered--reinforcing the idea that the NCUA and credit unions need to enhance their transparency and data collection."
Finally, while noting the lack of comparable information, Mica said the details presented in the report on credit union and bank executive salaries strongly suggests that credit union executive salaries are consistent with their not-for-profit status.
"What it really comes down to," concluded Mica. "Is that credit unions effectively offer affordable services to the members who they are limited in serving. Credit unions could serve even more Americans of modest means if Congress drops or lowers key barriers that hinder credit union reach to these consumers."
To view the complete reports and for additional analysis, use the resource links below.
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