|Credit unions under attack|
|Written by APB Staff|
U.S. credit unions provide low-cost financial services to 93.8 million members – including teachers, cops, and firefighters - nationwide. There's $2.6 trillion in state pension money under management in America right now. More than $1 trillion of those assets are held by credit unions. Now the banks that brought us the 2008 crash want it.
The attack on credit unions by the so-called financial services industry isn’t complicated.
Big banks and fat cat banksters say credit unions should have their not-for-profit tax status revoked because it gives them an unions an unfair competitive advantage over commercial banks.
But that’s nonsense. They just want the money so they can pay themselves more and to continue to rip off their own customers with impunity.
Here’s what Jason Gold, blogging on the site “Don’t Tax My Credit Union!” had to say about the big banks’ push to kill your credit union.
Last time I checked, there aren’t any credit unions that maintain a profitable global derivatives business and an essential investment-banking unit that underwrites multi-billion dollar corporate mergers and acquisitions.
Credit unions are member-owned financial service cooperatives rooted in a specific community. These communities range from schoolteachers in San Antonio to members of the United States Navy and their families worldwide.
Unlike traditional banks, the credit unions’ mission is to serve their members rather than maximizing profits. That’s why they don’t pay federal or state taxes. Any profit, known as a surplus, is returned to the members in the form of lower interest rates, lower fees and higher returns on members’ deposits.
During the financial crisis that began in 2008, the credit unions as a whole proved quite resilient. From 2008 through 2012, 481 FDIC insured banks were either liquidated or merged with healthier institutions. Credit unions, on the other hand, saw 136 involuntary liquidations or assisted mergers at the hands of the National Credit Union Share Insurance Fund (their version of the FDIC). Currently, there are 6,940 FDIC institutions compared to 6,815 U.S. credit unions.
In 2009, credit unions saw their delinquency for mortgage loans peak at 1.61 percent compared to 8.86 percent at the banks. Since 2009, credit unions’ share of first mortgages has actually increased as a percentage of total loans by 3.3 percent. Those are some pretty eye-popping statistics considering the severity of the crisis.
And credit unions achieved all this with an average compensation of $256,339 for their CEOs. While that may seem like a princely sum to you and me, it’s a mere holiday weekend for Goldman Sachs chief Lloyd Blankfein, who took home $26 million last year. (For perspective and fairness, Goldman is the fifth largest financial institution by assets and Blankfein rewarded shareholders with a 43.4 percent stock return last year.)
Credit unions have an established model that tens of millions of Americans find reliable and infinitely more accessible than the supranational banking behemoths. As tax reform heats up and there are calls to do away with this tax break or that, let’s stop and reconsider what’s on the table. To critics, the credit union tax exemption represents $2 billion a year in lost revenue to the taxpayers. But if looked at in the right way – as a modest public investment in a safer and sounder financial system – they are a bargain.
Do you use a credit union? If so please let us know what you think.