April 16, 2013
Good morning,
On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association exclusively representing the interests of our nation’s federally chartered credit unions, I write today to respond to the desperate arguments made by the banking trades in their ongoing effort to distort the truth about credit unions.
Those who represent mega-banks have claimed that “Our country faces a financial crisis and credit unions refuse to help.” This is a remarkable and ironic statement considering it was the nation’s banks that engaged in the risky lending that led to the financial crisis to begin with. In fact, their ads fail to mention that the banks they represent were bailed out by the American taxpayer to the tune of hundreds of billions of dollars through the TARP program because of the large number of subprime loans that they gave to hard-working Americans.
As released in a report by the Special Inspector General for TARP (SIGTARP) last week and subsequently reported in The Wall Street Journal, out of the 332 banks participating in the small business lending fund program run by the Treasury Department, 137 used more than half of about $4 billion disbursed by the program to help fund their exits from the Troubled Asset Relief Program. It was also found that a sizeable number of these banks didn’t increase lending at all. Christy Romero, the Special Inspector General for TARP, said it best, stating, “Small-business loan levels by TARP banks in [the] Small Business Lending Fund came up short.” While the banks are waiting for the next taxpayer giveaway, credit unions continue to do what they have always done – serve those within their field of membership – be it consumers or small businesses. As a matter of fact, a 2011 Small Business Administration Study found that credit unions stepped in and helped fill a small business lending need in this country when banks cut back their business lending during the economic downtown. Keep that in mind the next time a banker asks you to oppose credit union efforts to help our nation’s small businesses.
Despite what the bankers want you to believe, credit unions do pay many taxes (such as property taxes, federal payroll taxes, etc). The bankers also ignore the fact that nearly one-third of banks are Subchapter S corporations that don’t pay federal taxes themselves – a tax break worth billions to the bankers.
As the banking trades desperately continue to distort the true value of the credit union tax exemption, I hope you will take a closer look at the facts. An independent study examining the “Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses, and the U.S. Economy” released by NAFCU last year found that the total benefit of the credit union federal income tax exemption to U.S. consumers is over $10 billion per year. I encourage you to follow the link and read the study and summary.
As also evidenced by the study, altering the tax status of member-owned credit unions would have a devastating impact not only on the 95 million credit union members across the country, but also on consumers in general. Eliminating the credit union tax exemption would result in the loss, on average, of over 150,000 jobs a year over the next decade, a shrinking of the GDP and a net loss of revenue to the federal government.
If you have additional questions about the credit union tax exemption or other legislative issues impacting credit unions, please feel free to contact me at (703) 842-2204 or bthaler@nafcu.org.
Sincerely,
Brad Thaler
Vice President of Legislative Affairs
National Association of Federal Credit Unions