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As Congress gets down to business and thousands of credit union activists gather in Washington, most recently for our Governmental Affairs Conference, our agenda is clear: Help the middle class emerge successfully from the devastation of the Great Recession.
Credit unions can be a huge help, especially if they’re given the tools to best serve the middle class, which they do better than any other financial services provider.
But in doing so, credit unions’ ability to serve shouldn’t be hindered— especially by changing their tax-exempt status.
If we can make our best case about the value we offer and the trust we’ve earned, we’ll earn the additional tools we need to best serve our members—and keep our tax exemption intact.
Part of our legislative agenda for this new Congress is to enhance the credit union charter. Keys to that charter enhancement: helping credit unions grow by allowing them to raise supplemental capital and expanding their member business lending authority.
While we know these are sound objectives for credit unions and members, our adversaries—notably, the banks—apparently see both as threats to their ability to dominate the marketplace.
When we speak out in favor of these issues in Congress—particularly for legislation introduced by senators and representatives who support credit unions helping the middle class—the banks immediately deride the measures. They charge that credit unions are overstepping their boundaries and should be taxed just like banks.
They’re merely trying to change the subject.
For example, at the end of January, the American Bankers Association sent a letter to leaders in Congress opposing legislation to expand credit unions’ business lending authority. The group wrote that if credit unions want more power to make business loans, they should lose their tax exemption.
But the banks have run out of persuasive arguments in opposition to credit union member business lending. They know they can’t defeat us on the policy argument so they talk about our tax exemption, trying to put us on the defensive.
We don’t believe Congress has an appetite to tax 95 million Americans, which is exactly what would happen if Congress were to tax credit unions.
That’s an important message. But a more crucial point for all of us to make is the significant role credit unions play in their members’ lives by providing value and trust.
It’s the best way to illustrate that the structure of credit unions, including our tax exemption, should be left alone. Two key points to make:
1. Credit unions return value to their members and consumers-atlarge. CUNA estimates that, in the one-year period ending September 2012, credit unions provided $5.8 billion in direct financial benefits to the nation’s credit union members. Those benefits were delivered in the forms of lower loan rates, higher returns on savings, and fewer and lower fees than those charged by (or earned at) banks.
And credit union competition with banks acts to drive down loan rates, increase earnings on savings, and limit fees at banks—resulting in an overall savings to consumers of more than $8 billion.
That’s real value.
2. Americans trust credit unions. In survey after survey conducted by third-party groups, credit unions come out ahead of banks as most trusted. CUNA has detailed many of these in our daily online news service, News Now.
A recent example: The Chicago Booth/Kellogg Financial Trust Index (released in November) showed credit unions are the most trusted financial institutions (over big national banks and local community banks, too).
That’s real trust.
Lawmakers, policy makers, and members need to hear these points from credit unions. That’s especially true when bankers target our tax exemption, and the agenda for Congress includes tax reform.
If we clearly communicate the value and trust credit unions provide, we won’t be on the defensive— and we’ll be on the road to realizing our goals and helping the middle class even more.
BILL CHENEY is CUNA’s president/CEO.