The Wisconsin Credit Union League is once again calling out bankers, this time on their claims that credit unions are not doing enough to serve the underserved.
The Wisconsin Bankers Association wrote in a release, "Tax-exempt credit unions should expand their outreach to underserved populations rather than asking Congress for additional advantages over their taxpaying competitors."
Brett Thompson, president/CEO of the Wisconsin league, reacted strongly to the release. "What an irony that banks suggest credit unions do more to serve the financially underserved. Isn't that just what credit unions are trying to do in making more business loans available to the small businesses that can't get loans from banks?"
Thompson said CU business loans average around $174,772 to households with incomes below $50,000. According to the league, Wisconsin banks' business lending dropped by 19% from March 2009 to March of this year. Credit unions in the state increased their lending by 11% but many have maxed out what they can lend because their member business lending is capped at 12.25% of total assets. Legislation is pending on raising the cap to 27.5%.
"It might be funny if the future of many small businesses were not at stake, but we're talking about thousands of jobs that could disappear and otherwise sound enterprises that are being jeopardized because banks can't or won't lend to these small businesses," Thompson said.
In the past, the WBA has supported its claims by citing studies from the Government Accountability Office and the National Community Reinvestment Coalition. According to the banking association, the studies "have documented that taxpaying banks do a far better job of reaching underserved consumers than credit unions, despite the credit union subsidy that costs Wisconsin taxpayers at least $40 million and at least $2 billion nationally."
"WBA quotes the same flawed, disavowed studies about credit unions, once gain misstates the mission of credit unions and claims that credit unions' member-favored pricing for financial services somehow constitutes a subsidy," he said.
Thompson questioned how banks can claim to do more than credit unions for the underserved "when it's been the banks that have virtually shut off the credit spigot for small businesses, creating a void for loans that credit unions can't completely fill under current law."
Given the state and federal budget imbalances, WBA President/CEO Kurt Bauer said it doesn't make sense to give a tax-exempt industry more advantages at the expense of taxpaying ones.
"If you surveyed taxpayers on the fact that credit unions score below banks in serving lower income consumers and that even the largest don't pay a dime of state or federal corporate income tax, I wonder how high the percentage demanding change would be," Bauer said.