WASHINGTON – Ranking Member of the Financial Institutions and Consumer Credit Subcommittee Bernie Sanders (I-Vt.) has written the Government Accountability Office requesting a study of several issues of interest to credit unions concerning the banks.
Sanders noted, “Since the Savings and Loan crisis of the 1980s and the enactment of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) the federal government has provided billions of dollars in aid and benefits to the banking and thrift industries, at a time when they continue to see quarter after quarter of record profits and consumers see more and higher bank fees.”
He listed out nine separate multiple part questions:
1) What was the total cost of the Savings and Loan bailout of the 1980s? How much of that was paid for by the thrift industry? What was the total cost to the American taxpayers?
2) Since 1990, how much money has the U.S. Export Import Bank provided to the financial services industry in direct loans and other forms of financial assistance? Which banks are the top beneficiaries of these benefits and how much did they receive?
3) Since 1990, how many loans has the U.S. Export Import Bank guaranteed to the financial services industry? Which banks are the top beneficiaries of these loan guarantees? Since 1990, how many of these loans have defaulted, what was the value of these loans, and at which banks did these defaults occur?
4) In dollar terms, since 1990, how much assistance has the Overseas Private Investment Corporation provided to the financial services industry? Which banks are the top beneficiaries of these benefits and how much did they receive?
5) Since 1990, how much money has the International Monetary Fund provided to the U.S. financial services industry for risky loans they made in Asia, South America and other parts of the world and what was the U.S. contribution?
6) What other subsidies and benefits has the federal government provided to the banking and thrift industries since 1990? What tax breaks and avoidance measures do banks and thrifts use to avoid paying taxes to the federal government? What is the annual and total dollar benefit of these? Who are the top beneficiaries? 7) How many “Subchapter S” banks are there and how large are they? Have there been changes that have facilitated the growth of the number of Subchapter S banks since 1990? Are there any in the last five years that paid no income taxes in a given year, but received a tax refund for that year? What is the estimated revenue lost to the federal government in 2005 by banks incorporated as “Subchapter S” status as compared to them not receiving the tax benefits of subchapter S status? What percentage of “Subchapter S” banks failed to receive an “Outstanding” rating in their 2005 CRA exam?
8) How have bank and thrift profits changed since 1990? How have salaries and compensation packages of banks and thrift executives and directors changed since 1990?
9) How much non-interest income did the banking and thrift industries make in each of the last five years? Would the banking and thrift industries still have been profitable in each of the last five years without this income? What has been the impact on consumers of these fees?
The letter was dated July 12, opening day of NAFCU’s Annual Conference. When asked of their involvement in the letter, NAFCU Director of Legislative Affairs Brad Thaler said, “He agreed with us that it was an issue that should be looked at.” Thaler said he believes the study will show that the advantage to credit unions for their tax-exemption is “paltry” compared to the banks’ savings, explaining that the bankers like to talk about the tax-exemption in a vacuum without looking at the entire financial services picture. Sanders has long been a strong credit union supporter and railed against corporations in general, including banks, for taking advantage of the average consumer. The congressman is currently running for the Senate seat being vacated by Jim Jeffords (I-Vt.).
It is precisely this history as well as the facts, America’s Community Bankers Vice President and Legislative Counsel Ike Jones said, that keeps him from worrying about the report. “This stuff is very one-sided. I have full confidence the GAO will not take his view of the world,” he stated.
“Mr. Sanders is a very thoughtful member of Congress. I’m not surprised. I think he’s very much a credit union supporter,” Jones added.
He also pointed out that unlike credit unions, “We do pay taxes. He didn’t ask what we do pay.” Banks’ tax money goes toward programs Sanders likely supports, Jones said, like Medicare and other social programs. “Credit unions have the sweetest deal going for any business.” -firstname.lastname@example.org