PEWAUKEE, Wis., April 17 /PRNewswire/ — The Wisconsin Credit Union League, which represents 272 not-for-profit, member-owned financial cooperatives, issued a report to the state Legislature today that responds to a flawed “study” of credit unions paid for by the banking industry. The League’s report, “The Truth About Wisconsin Credit Unions” (viewable at http://www.theleague.coop/banksmuststop), suggests that the Wisconsin Bankers Association’s (WBA’s) March 19 report — which proposes heaping more taxes on Wisconsin’s working families who own credit unions — is a grab for profits at the expense of the public good.
According to the League’s report, credit unions provide $157 million in annual savings to credit union members via lower rates on loans, higher rates on savings and lower and fewer fees than for-profit banks. It also notes that low-income families save as much as $44 million a year because they have access to low-cost credit unions and are not forced to use higher-cost banks.
“All of this would be lost if the banks got their way and credit unions were eliminated,” says League President & CEO Brett Thompson.
Despite WBA’s urging to further tax credit unions — which already pay millions in taxes annually — Thompson says the member-owners of credit unions would pay the real price for credit unions being taxed as though they were banks.
“A tax on credit unions is a tax on their 2.1 million members,” he says.
The League’s report says WBA used as its premise a mischaracterization of credit unions’ mission — suggesting that references in the law about credit unions serving people of “modest means” limits credit unions to serving only low- to moderate-income people. Rather, the League’s report points out Congressional testimony and the recent affirmation by the federal regulator of credit unions — the National Credit Union Administration (NCUA) — that credit unions were formed to serve working Americans. Still, NCUA says credit unions do a particularly good job serving people who live paycheck to paycheck. The League’s report also cited data ignored by WBA that shows credit unions do a better job than banks serving lower-income households.
“Low income borrowers were almost twice as likely and minorities were two-thirds more likely in 2005 to have their home loan approved by a credit union. It’s no surprise; credit unions operate 40 percent of all depository institution branches in the state’s low-income census tracts. By contrast, 94 percent of all Wisconsin banks — including 12 of the largest 20 banks — have no branches in low-income census tracts. Only about 50 of 2,300 bank branches exist in low-income areas,” the League’s report says.
“WBA’s report exaggerates data, takes information out of context and misrepresents a number of studies to support its flawed perspective on credit unions’ mission, all while the NCUA affirmed last November that credit unions are doing a great job serving those they were created to serve: working Americans,” The League’s report adds.
Though Wisconsin banks earned a near-record $1.5 billion last year, Thompson says WBA sees more earning potential by eliminating credit unions altogether — even if doing so comes at the expense of families who benefit from credit unions.
“What public policy would be served if credit unions were eliminated? Other than banks, who does that serve?” Thompson asks.
WBA also failed to cite the myriad services credit unions offer that don’t drive profits but set people on a more solid financial path. For example, credit unions have earned high praise from Wisconsin lawmakers and media alike for their REAL Solutions initiative that is bringing more consumers into the financial mainstream, encouraging saving and wealth building and going above and beyond to meet the needs of low-income and underserved people. Wisconsin credit unions were the first in the nation to pioneer the massive outreach effort, which received a Governor’s Award for Financial Literacy.
“Banks want to kill consumer choice for financial services. Without credit unions, there’s no reason to keep their pricing and fees in check,” Thompson explains.
Nationally, bank customers are estimated to save $4.3 billion because of credit union competition in the marketplace.
Thompson adds that while WBA feigns concern for state revenues, banks have been hiding assets in out-of-state subsidiaries — and seeking Subchapter S and other tax favored mechanisms — to shelter millions from state taxes. At one point, some of the largest, most profitable banks in Wisconsin were paying no taxes at all.
“What the banks propose is not good for working families, it’s not good for consumers, it’s not good for the state and it’s not even good for bank customers,” Thompson says.
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Source: The Wisconsin Credit Union League
