By Brian E. Clark
The long-simmering fight between the Wisconsin Bankers Association (WBA) and the rival Credit Union League has heated up again. It bubbled to the surface this spring, when the WBA issued a report highly critical of credit unions.
Since then, cyberspace has been filled with charges and countercharges. See the WBA website at http://www.wisbank.com/ and the League’s site at http://www.theleague.coop.
The squabble may ultimately play out in the Legislature, with the WBA backing a measure that would strip the state’s credit unions of their exemptions from the state’s corporate income tax. It’s a break worth between $10 million and $40 million, depending on which side is doing the calculating.
“There is no bill pending at the moment, but to say we are interested (and would support it) is true,” said Kurt Bauer, president and CEO of the WBA. On the national level, he said banking groups are opposed to two measures now in Congress that would expand the reach of credit unions.
For its part, the credit unions say they deserve their tax breaks because they are doing a good job of serving low- and moderate-income customers. But they also say there’s nothing wrong with doing business in higher-income areas, something that Congress approved in 1998.
The WBA’s Bauer said several recent studies critical of credit unions have added fuel to the fire. One was done by the federal Government Accounting Office (GAO), another was commissioned by the WBA and a third was done by the left-leaning National Community Reinvestment Coalition (NCRC).
But Brett Thompson, president & CEO of the Wisconsin Credit Union League, faulted all three studies, especially one done by the GAO, which he said was later discredited.
And he accused the WBA of “grossly” overstating the tax breaks received by credit unions in Wisconsin. Instead of $40 million, he said the figure is much closer to $10 million.
“But what they don’t want to talk about is the fact that credit unions save their members $150 million a year in lower interest rates and fees,’ said Thompson, who argued that “highly profitable” banks control 90 percent of the financial services market in Wisconsin.
“Our focus is on serving people, not making money,” Thompson said. “That’s why, for example, we have programs in our schools to teach juniors and seniors basic financial skills.”
Thompson blasted the bankers association for continuing what he said has been a decades-long assault on credit unions dating back to the Great Depression, when credit unions were first formed.
“We have a strong history of serving working families,” he said.
Though Thompson said he couldn’t predict what would happen with any bills that might be introduced in the Legislature, he suggested that WBA criticism is making the credit unions stronger.
“Attacking us improves our position. It makes more people aware of what we offer. Moreover, legislators know the benefits we provide and we have strong bi-partisan support.”
Bauer, however, said his group will be doing more to educate the public and legislators about what he called credit unions’ “unfair tax advantages.”
With the often-acrimonious state budget debate just concluded, Bauer said he thinks it’s “appropriate” for lawmakers to consider who is benefiting from tax breaks.
“The GAO study said half of their customers are upper income,” he said. “Do they need subsidized financial services?
“And our study said they are disproportionately branching into upper-income neighborhoods. Not in rural areas or inner city Milwaukee.
“What are taxpayers getting in exchange?” he added. “I think it is a discussion that we need to have.”