NAFCU Tells Bankers to Leave Credit Unions Alone
Learn how NAFCU responded to a letter from the American Bankers Association that renewed several familiar charges against the credit union industry.
CU advocacy organization pushes back after letter from banking group renews several familiar charges against the industry.
Responding to the latest broadside from the American Bankers Association (ABA), NAFCU has accused bankers of attempting to “kneecap an alternative provider of financial services so they can continue to exploit American consumers.”
The ABA recently sent a letter to members of Congress. That letter—a copy of which was not available Friday—apparently renewed many of the charges that bankers have leveled against credit unions for many years. Charges that, of course, include the credit union federal tax exemption.
The banking organization also operates a website, reformcreditunions.com, that is devoted to blunt criticism of the credit union system.
This latest missive comes at a time when credit unions and banks have united on high-profile issues, such as the CFPB’s small business lending rule and proposed legislation changing the credit card interchange system.
Inside the NAFCU Letter
In his letter to members of Congress, NAFCU Vice President of Government Affairs Greg Mesack wrote that the primary complaint leveled by the ABA is simply that more people are joining credit unions than are joining banks.
“If banks are wondering why people are leaving them to join credit unions, they just need to look in the mirror,” the letter states.
He added that banks have been closing branches, noting that during the past five years, banks have closed more than 7,000 branches in rural underserved areas.
In addition, Mesack pointed out, the top five big banks have paid more than $200 billion in fines over the past two decades.
“It is no wonder that working Americans are turning to credit unions, where they are member-owners who have a voice rather than a piggy bank to fund big bank CEO bonuses,” he wrote.
Mesack said further that banking groups are continuing their drumbeat on the credit union tax exemption while failing to mention the tens of billions of dollars in tax breaks banks have received from the Tax Cuts and Jobs Act. They also do not mention that nearly one-third of all banks are Subchapter S corporations and do not pay corporate taxes themselves, the letter notes.
Backstory and Context
The accusations leveled by the ABA are the same ones the banking industry has leveled against credit unions for years.
This has yet to move members of Congress though, who have been reluctant to conduct a probe of the credit union community. The last advocate for such an investigation was former Sen. Orrin Hatch, R-Utah, who called for an examination of the tax exemption for large credit unions. However, Hatch only mentioned the probe after announcing his retirement and no other lawmaker has chosen to take up the issue.
House Ways and Means Committee member Rep. Randy Feenstra, R-Iowa, championed legislation that would have eliminated the state tax exemption while he was a member of the state legislature. But even Feenstra has not broached the subject as a House member.