PEWAUKEE, Wis. — The Wisconsin Credit Union League sent a report to the state legislature last week to counter what it calls "a flawed study" of credit unions sponsored by the banking industry.
The Truth About Wisconsin Credit Unions states that credit unions provide $157 million in annual savings to its members through lower loan rates, higher savings returns, and lower and fewer fees than their for-profit counterparts. The league report called the bankers' efforts to impose taxes on credit unions, and therefore their members, "a grab for profits at the expense of the public good."
The report, available at www.theleague.coop/banksmuststop.com, also highlighted that low-income families save as much as $44 million a year because of credit union access and they are not forced to use higher-cost banks. "All of this would be lost if the banks got their way and credit unions were eliminated," Wisconsin league President/CEO Brett Thompson said.
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He added, "A tax on credit unions is a tax on their 2.1 million members."
The league's report states that the Wisconsin Bankers Association study mischaracterizes credit unions' mission as serving only those of low- to moderate-incomes, rather than working people as included in congressional testimony and reaffirmed by NCUA. WCUL calls bankers' claims that they are having difficulty competing "ridiculous," noting that one Wisconsin bank has more assets than the state's 272 credit unions combined.
The study acknowledges that smaller banks' market share has dropped 10 percentage points between 2000 and 2006, but nearly 90% of that loss was to larger banks. WCUL also pointed to a number of errors in the study, much of which was based on branch placement, including where one credit union's field of membership was located and non-existent branch openings of another.
In fact, credit unions are serving those of modest means, according to the league. "Low income borrowers were almost twice as likely and minorities were two-thirds more likely in 2005 to have their home loan approved by a credit union. It's no surprise; credit unions operate 40% of all depository institution branches in the state's low-income census tracts. By contrast, 94% of all Wisconsin banks–including 12 of the largest 20 banks–have no branches in low-income census tracts. Only about 50 of 2,300 bank branches exist in low-income areas," the league reported.
Despite Wisconsin banks earning a near-record $1.5 billion last year, Thompson said, WBA sees more earning potential by eliminating credit unions altogether at the expense of their members. "What public policy would be served if credit unions were eliminated? Other than banks, who does that serve?" he asked.
Thompson also cited numerous services offered by credit unions that do not drive profits, but are there to help members out, like the REAL Solutions financial education initiative that received a Governor's Award for Financial Literacy.
"Banks want to kill consumer choice for financial services. Without credit unions, there's no reason to keep their pricing and fees in check," Thompson asserted. Nationwide, bank customers save an estimated $4.3 billion due to credit union competition.
Thompson added that while WBA broadcasts its concern for state revenues, banks have been hiding assets in out-of-state subsidiaries and seeking Subchapter S and other tax favored mechanisms to shelter millions from state taxes. At one point, some of the largest, most profitable banks in Wisconsin were paying no taxes at all, according to the WCUL. –[email protected]
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