Management

Consumers Must Speak Up to Support CUs

We want to ensure consumers ‘get’ this point: A tax on CUs is a tax on consumers.

November 09, 2012
/ PRINT / ShareShare / Text Size +

The juice isn’t worth the squeeze.

The first time I heard that saying, I knew precisely what the speaker meant. But, the more I thought about it, the more it became clear to me that it was much more.

And, with little doubt, next year as Congress struggles with how to deal with the federal budget, we’ll be challenged to show everyone that assaulting the credit union tax exemption—in any form—won’t be worth it.

The juice won’t be worth the squeeze.

The phrase, as I first heard it, came from a Washington insider commenting on the relative benefit of changing the tax-exempt status of credit unions. He meant, clearly: The money raised by taxing credit unions wouldn’t be worth jeopardizing the benefits all American consumers receive from the tax exemption.

Those benefits are lower rates on loans, higher return on savings, and fewer or lower fees.

For several years now, CUNA has calculated the direct financial benefits in dollars that credit unions provide to members.

In 2011, for example, the total was $6.3 billion—which, spread among all credit union members, comes out to about $68 for each member, or $130 for each member household.

Because these are averages, the numbers don’t account for how much (or how little) a given member uses a credit union. In other words: The more a member uses a credit union, the more he or she saves, and vice versa.

But if a member is a “loyal member” to the credit union, the total financial benefits are much greater than average.

The credit union tax status benefits all consumers—credit union members and those who aren’t yet members. That’s because credit union competition keeps bank savings rates higher and loan prices lower. This pushes the financial benefits to all consumers up to $10 billion annually.

But stripping away the tax-exempt status of credit unions would change all of that. In CUNA’s view, it would fundamentally alter or destroy the credit union system as we know it.

Credit unions could no longer focus on making decisions aimed at returning savings to their members in lower loan rates, higher savings rates, or fewer and lower fees. Instead, treated just like for-profit banking institutions, credit unions would face pressure to behave just like banking institutions—resulting in substantial declines in both member financial benefits and nonmember benefits as well. Again, credit unions in the marketplace positively affect bank rates and fees for all consumers.

That juice certainly isn’t worth the squeeze.

But I’ve had some additional thoughts regarding the meaning of this phrase—primarily, what it means for credit unions.

A wise lawmaker once said that “a tax on credit unions is a tax on American consumers.” While those of us in the credit union movement understand the fundamental importance of the tax exemption on our institutions, it’s not so clear members and consumers-at-large “get it.”

That’s our job in the months ahead: to ensure consumers “get” that credit unions are not-for-profit cooperatives. And that they “get” credit unions exist to provide financial services to their members, and not just to accumulate and pay
profits for shareholders.

We want consumers to “get” that the structure of credit unions translates into a better deal for them, and to “get” that if credit unions are taxed consumers will lose—and end up paying the price, typically higher, set by banks. Finally, consumers must “get” that a tax on credit unions is really a tax on consumers.

And that’s the second part of the meaning of this phrase: Our members, and consumers-at-large, must play a key role supporting our status. They’ll have to speak up, and we’ll need to help them understand why it’s so important to do so.

Because for consumers, as for us: The juice isn’t worth the squeeze.

BILL CHENEY is CUNA’s president/CEO.

Post a comment to this story

heroes

What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive