GAO Study Indicates CUs have no Adverse Impact on Bank Profits
Mica decries banker complaints in face of study by investigative arm of Congress

May 30, 2007

FOR IMMEDIATE RELEASE
Contact:
Pat Keefe, CUNA
(202) 508-6765; pkeefe@cuna.com

WASHINGTON -- Bank profitability has in no way been adversely affected by competition from credit unions, results of a new study on banking activities by the Government Accountability Office (GAO) seem to indicate.

The GAO study, requested by then-Rep. Bernie Sanders, I-Vt. and completed April 30 (but publicly released today), includes data showing net income has increased at banks an average of 7 percent annually for the last 10 years (adjusted for inflation). During the same period, and using the same parameters, the study showed credit union net income increased only 3 percent annually.

Further, the GAO study’s results reveal that return on assets at banks – called the “basic yardstick for measuring bank profitability” by the Federal Deposit Insurance Corp. (FDIC) – has largely grown at banks every year since 1993. During the same period, ROA at credit unions remained flat or declined.

The GAO study shows that, at year-end 2006, ROA was 1.27 percent for banks, 0.96 percent for thrifts – and only 0.81 percent for credit unions.

“This study pounds a big dent into the bankers’ persistent and loud argument to Congress that banks are suffering at the hands of credit union competition,” said CUNA President and CEO Dan Mica. “Banks have a distinct advantage, and they are well aware of it. They cry so loudly about legislation such as the Credit Union Regulatory Improvements Act not because the bill will hurt them – but because they know it will help credit unions become even better at helping their members. Their complaints – and opposition to CURIA – are rooted in their fundamental zeal to drive out other providers in the financial services industry.”

Sanders, now a U.S. Senator for Vermont, said last year (when requesting the study) that he wanted to see how the banking and thrift industries have benefited from tax breaks.

According to a Sanders spokesman last year, the intent of the request for the GAO study was to "provide, for the first time, a comprehensive review of how much banks, especially big banks, have benefited through tax breaks and subsidies.”

The study was released to Sanders’ office for review on April 30.

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