The bank lobby’s anti credit union claims ring hollow

To the editor,

The recent article (Banks’ gripes with big credit unions are gaining momentum, November 5, 2024) on the banking lobby’s criticisms of credit unions’ growth within the market reveals banks don’t understand the role credit unions play in communities and at the kitchen table for more than 140 million Americans. It also fails to recognize the fundamental differences of these institutions.

Credit unions, regardless of their asset size, are designed to serve communities — and as the data shows, their existence makes banks better — they don’t put banks out of business. As member-owned, not-for-profit cooperatives, credit unions reinvest their earnings to benefit members through lower fees, better loan rates, tailored community programs, and to help them reach their financial goals and live their best lives.

Banks argue that large credit unions enjoy an “unfair” advantage due to their federal income-tax-exempt status. This is essentially a red-herring argument, not to mention hypocritical, given the billions of dollars in tax breaks banks receive. Credit unions contribute more than $2 trillion in tax revenue throughout the country annually, and imposing a federal income tax on credit unions wouldn’t even fund the government for four hours.

But what this federal income tax exemption does enable is credit unions’ reinvestment directly in their communities, providing essential financial services to millions who might otherwise live in a banking desert. Instead of prioritizing profits for shareholders, credit unions are designed to create value for their members and provide another safe and secure financial institution option.

Dismantling the tax-exempt status or imposing new restrictions on credit unions would ultimately be a huge disadvantage for local consumers and the communities who rely on their services. Credit unions are not the financial giants that the banking industry portrays them to be; rather, they are often the best — or only — choice for individuals seeking affordable banking options.

And worse, eliminating the tax exemption would likely create a world without credit unions. The banks don’t want “fairness” in the tax code — they want lawmakers to take out their competition.

Instead of pushing credit unions to operate like banks, we should support these member-focused institutions and their mission of financial inclusion. Credit unions offer a cooperative, accessible alternative in a landscape where large banks sometimes fall short of meeting the needs of everyday people.