For more information, contact: Eric Skrum, Wisconsin Bankers Association, 608/441-1216, eskrum@wisbank.com
(MADISON) The Wisconsin Credit Union League’s Brett Thompson may claim that banks are playing a “shell game,” but in reality that is the game WCUL is playing as they ignore the fact that Wisconsin credit unions have not been denied when asking to exceed their member business lending cap; TARP has been profitable for taxpayers; and the Small Business Lending Fund is helping Wisconsin businesses.
“WBA opposes raising the credit union member lending cap because it enables large, profit-driven credit unions to abandon their tax-exempt mission of serving people of low and modest means,” explained Rose Oswald Poels, Wisconsin Bankers Association president/CEO. “If credit unions would like to have the discussion about exchanging their tax status for increased business lending privileges, we will be the first one at the table.”
“Currently nine credit unions in Wisconsin are exempted from the member business lending cap. The majority of the other credit unions are nowhere near the lending cap,” added Oswald Poels. “And, if they were close to the cap, they could simply petition state regulators and likely would receive a waiver.” (See chart below.)
“It’s ridiculous to claim the lending cap is inhibiting their lending when all evidence points to the contrary.”
As for TARP (Troubled Asset Relief Program), a critical aspect that continues to be ignored is that the depository bank portion of TARP is now making a profit for taxpayers.
“The U.S. Government and taxpayers made an investment nationally in depository banks of $245 billion through the Capitol Purchase Program (CPP) portion of TARP in 2008. Since then, the U.S. Treasury Department has reported that $256 billion has been collected by the government through repayments and dividends,” explained Rose Oswald Poels, WBA president/CEO.
“That’s an $11 billion profit to taxpayers. And, Treasury is estimating the bank portion will ultimately provide over $20 billion in profits when all is said and done,” said Oswald Poels.
“The U.S. government chose to use CPP as an investment in depository banks to stabilize credit markets and inject liquidity to stimulate lending and economic activity. That investment did exactly what it was supposed to and has made a profit for the taxpayer.”
“If taxpayers are footing the bill for anything, it is the credit union tax exemption which is among the top 15 costliest corporate tax expenditures (or foregone tax revenue) in our nation according to the U.S. Office of Management and Budget (The President’s Budget: Analytical Perspectives, 2011).”
This is at the rate of an estimated $34.5 million annually in Wisconsin and nationally it will cost an estimated $7.92 billion in tax revenue over the next five fiscal years (FY 2012–2016). The credit union income tax exemption was provided in exchange for their mission of serving people of modest means. According to the Government Accountability Office, 49 percent of all credit union customers are considered upper income and another 20 percent are middle-income, compared with 18 percent and 41 percent for banks.
Wisconsin banks continue to make business loans, with and without the aid of the Small Business Loan Fund while consumers and businesses alike benefit from Wisconsin’s diverse banking system that its residents enjoy.
BY THE NUMBERS
Wisconsin CUs Exceed Lending Cap
Using public data as of June 30, 2011, here is a list of the top nine credit unions in Wisconsin where the commercial lending percentage is currently greater than the 12.25 percent lending cap.
Royal Credit Union 35.66%
Westby Co-operative Credit Union 28.48%
Heartland Credit Union 25.85%
Community Credit Union (La Crosse) 22.48%
Superior Choice 19.06%
Westconsin Credit Union 18.99%
Covantage 17.47%
Fox Communties Credit Union 13.86%
Tomah Area Credit Union 13.06%
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The Wisconsin Bankers Association is the state’s largest financial industry trade association, representing 300 commercial banks and savings institutions, their nearly 2,300 branch offices and 28,000 employees.
