The credit union national organization is in a regulatory battle with the American Bankers Association with South Dakota the battlefield.
Credit unions make the bankers look bad and the ABA wants to crush them every way they can. There are many credit union misunderstandings. Credit unions are member owned cooperatives. By being member owned cooperatives they are designed to only have their members best interests as their primary mission. Lower loan rates, member community first. We used to have member owned credit union co-ops as part of many businesses and government departments. As time has gone on, the little credit unions have consolidated and became open ‘community’ credit unions, serving a larger cross section of the locality they are based. Remember the Bell Credit Union? How about the Morrell Credit Union? Air Guard, All American, and so many more. All of these have changed their missions or names as their associated companies or offices changed hands over the years.
Talk to a credit union member, you will see why they are for the most part a happier bunch. When you go into your credit union, you will often see the same faces you have seen for years. Stability in policy and function. Try to get this at your multi-national mega bank. So back to the battle, if you can’t beat the credit union on the PR front, kill the little buggers with state regulations and taxes.
In the South Dakota legislature this year is a movement to strip the non-profit / cooperative credit unions of their tax exempt status. The NCUA and ABA have been fighting for their versions of model legislation in the land of ALEC.
READ the plea letter here:Â Credit Union 2014
How about the disappearance of the credit union at Sanford Health (SV Hospital), which was replaced with a First Premier Bank branch.
Anything and everything is for sale in South Dakota! And often to out of state entities that couldn’t care less about “flyover country.” So why would anyone be even remotely surprised that South Dakota would try to make life harder for the credit unions that compete with the million+ local banks in Sioux Falls?
The real reason this has become an issue (nationwide – not just South Dakota) is because when the idea of Credit Unions was originally dreamt up, it was designed to serve areas which didn’t have access to banking services and meant to serve low income individuals. Membership requirements were also very specific (work for one specific company or industry, live and work in a small town or have an income below a certain threshold).
Now look at the Credit Unions today – they serve in areas that are already well served by banks. They allow membership to almost anyone with very few restrictions going so far as to say anyone who works, lives, has kids in public school, or attends church in several counties qualifies, and they don’t care how much money you make. If you move across the country or no longer are employed by the same company the Credit Union doesn’t care – you can still keep your accounts open. This isn’t what the original mission or charter was, and that is what is causing the problem.
Also, it is important to realize not all Credit Unions are small. There are over 200 of them with assets greater than $1B which makes them larger than over 90% of community banks. So why should a Credit Union be tax exempt, when a bank has to pay taxes? We aren’t talking about megabanks vs. small-town Credit Unions here. We are talking small town family-owned banks that are required to pay taxes vs. a Credit Union that isn’t. How does that make sense?
Credit Unions are a $1T (yes Trillion) industry, yet they pay no federal income taxes. Meanwhile we have a goverment who cannot balance a budget and people suggesting we eliminate tax deducations for individuals such as the mortgage tax deduction while at the same time those very same people crying that it wouldn’t be fair to tax Credit Unions? I don’t understand this logic.
Mutual Insurance Companies and Mutual Savings Banks both already pay taxes as well, so in reality Credit Unions are the only remaining industry which has retained their tax-exempt protections. It seems to me this is just another example of an industry abusing their tax-exempt status while the American taxpayer is the one left to pay for it.
Well said Craig. The CU served a meaningful purpose when it was an integral part of a company. As an employee, you went there for reasonable rate on loans, a place to save, etc. They are now nothing but another bank trying to get your business. And the rates are no longer reasonable.
The Big 4 Banks (Chase/Cit/BoA/WellsFargo) INDIVIDUALLY have more assets than the ENTIRE credit union movement!
CU members represent 40% of all Americans, yet represent only 6% of financial institution assets. Tell me how THAT is an unfair playing field.
Craig, because they are Not-For-Profit, that’s why they don’t pay the taxes. Maybe we should start requiring churches and hospitals to pay taxes?
Not-for-profit is merely an excuse. Just look at Davis Maus the CEO of a Denver area Credit Union. His compensation in 2012 was $11M. This is not the small town local Credit Union image that has been pressed into our memories.
Meanwhile you have the Credit Union lobby pushing for more big-business lending authority. This isn’t about giving a small loan to a school teacher who is looking to buy a new car or remodel a kitchen… the large Credit Unions are looking for the ability to loan Billions to large businesses.
This is the activity worthy of a tax-exempt status? I fail to understand why.
And to your point about hospitals and churches DL – I’d be all for them paying taxes too. There are many for-profit hospitals that charge significantly less than our local “non-profits” for the same services, and I’ll never understand the whole church issue being non-profit when you see the hundreds of millions of dollars being shuffled to the leaders who live in mansions and live like kings.
The NFL is also considered a non-profit… that doesn’t make it right. If we want to get serious about balancing the federal budget, it is time to reign in some of these tax loopholes that benefit special interests.
Craig, why not institute compensation rules on all CEO type people. After all most are only employees and not actual owners of the businesses they run.
Why should anyone in this country be able to collect a salary of $11 million per year? What makes someone worth 750 times more than the entry level person working in their business?
Compensation board reforms are required. The CEO of the business you work for definitely is not worth the money – compensation received.
A real non-profit coop is there for the owner members. Income inequities are not good for democracy just as absolute power in the political world.
I would venture to guess the Denver example given has compensation board members from partner businesses who wish to improve their own compensation. Your example has nothing to do with the issue in the SD legislature.
The ABA has arrived in SD to use our lax ALEC owned legislature just like the fringe right uses them for their phony abortion wars.
Craig – the real problem is that Credit Unions are considered “a problem” by the (other financial) powers that be.
Ruf, No kidding, right?
Have been a member of the Sioux Falls Federal Credit Union for over 30 years and have NEVER had any regrets. I would bury my money in my back yard before J would ever allow myself to do do what Sanford did at their hospital. There is a reason, several actually.
http://www.businessinsider.com/credit-unions-vs-big-banks-2013-4
If the US banksters are “for” anything, then the historical record shows that in the name of public interest we the people should be against it. A tale of one Denver credit union that has a salary out of control is a lousy defense of the banksters which have hundreds, if not thousands of executives and board members who’s total compensation is in the multi-millions. Besides, what does Denver have to do with South Dakota.
As an aside the best thing that could happen to South Dakota would be establishing a state bank, as per North Dakota. What the banksters lips and hair curl at that suggestion.
It probably has to do with the fact that the word “union” is in the name (and functional apparatus) of the bankers’ competition. Hey I thought these bankers were all about the “free market” as the best way to run the world/sort out the winners from the losers? I guess not when their business model is LOSING, huh?
Disclaimer – former member of Morrell, Alcoa and VA Federal Credit Unions.
rufus, you’re confusing a free market with one which subsidizes one industry over another. That is the precises example of the government picking winners and losers. This would be like passing legislation allowing Ford Motor Company to operate as a tax-exempt entity while continuing to require General Motors, Toyota, Nissan, or Tesla Motors to pay income taxes. That is the exact opposite of a free market.
The government has decided that certain financial institutions should be tax exempt while others should not. We need to ask ourselves if we feel this makes sense, but we need to do so without the emotion that comes from blurring the issue when referring to the mega banks, because that isn’t the issue here. The issue is banks of all sizes and specifically those comparable in size to our local Credit Unions. A privately held small town bank has to pay taxes, but a Credit Union in the same town who offers the same services doesn’t?
It isn’t about being member owned either, because there are many co-operatives ranging from electric utilities to grocery stores to gasoline suppliers which are co-ops and yet they pay income taxes.
I’ve noticed an outcry from many here that marketing and advertising is tax free in South Dakota, but yet many of the same people feel some banking organizations should be tax exempt. It is one thing to say the megabanks should continue to be taxed, but what about the small community bank that has been owned by the same family for three generations… why are they punished while the Credit Union down the street is tax-exempt? I fail to see the logic.
People don’t want to hear it because they think of all banks as evil and all credit unions are great, but the truth is credit unions have outlived their original purpose and they have strayed from their original mission. There is no justifiable reason for the American taxpayer to continue to subsidize a trillion dollar industry just because ‘that is the way we have always done it’.
@ John – I used the Denver example as evidence that calling yourself “non-profit” doesn’t mean people are working for the benefit of the organization or that money isn’t being directed elsewhere (aside from the membership).
In fact, a comparison of CEO pay between banks and Credit Unions has shown for organizations with assetts greater than $250MM, Credit Union CEOs are actually paid more than their bank counterparts.
We have also seen examples of where Credit Unions have paid for naming rights on sports stadiums and scoreboards, just as our local non-profit hospitals have done.
I’m just pointing out that being non-profit has no bearing on where the cash goes. As I stated previously the NFL is also non-profit, and nobody is going to suggest those in the head office aren’t well compensated. The term “non-profit” is effectively an oxymoron.
Craig, you don’t seem to understand the tradition and law of non-profit cooperatives in society. This is not a winners or losers thing chosen by the government.
Credit unions are cooperatives just like rural water, telephone, diary, electric and other types of coops Americans have supported and US law has protected.
We are now town and state ruled by mega banks who do not want to be embarrassed by the little operation working on the fringe. This legislation is the result of the bank holiday movement of the last couple of years where people publicly moved their banking from the mega banks to credit unions.
Our local mega bank operations seem to miss the point of coops.
Again GP, I’m not talking about megabanks. I also don’t buy into that “bank holiday” nonsense because I’ve seen the numbers and the megabanks are actually gaining customers and accounts… not the other way around. There was a movement for people to move accounts, but over time that movement reversed itself so it is a moot point.
I don’t beleive any of the big guys are scared of a small town credit union, and thus that isn’t the core issue I’m speaking to.
Look at why Credit Unions were originally chartered and the group of customers they were designed to serve. We can’t argue that we have vast areas of the nation that lack adaquate banking services, nor can we argue that low income or moderate income individuals are the target market of modern day Credit Unions.
I’d support the tax exempt status for smaller CUs who did in fact serve low-income or underserved areas, but that isn’t the case for the vast, vast majority of our modern day CUs. These days if you have a pulse, you can be a member of a CU – which is quite different from the original mission and charter.
There was a movement for people to move accounts, but over time that movement reversed itself so it is a moot point.
Curious Craig. What orifice did you pull that quote from?
His employer has many orifices to choose from.
Craig – FYI – the banking industry (including the credit union segment) is WHOLLY subsidized by the federal government. 100%.
His employer has many orifices to choose from.
To say the bank holiday movement has reversed itself is straight from Orwells 1984 and doublespeak. Credit union membership has increased by over 4.1 million people from June 2011 to Sept 2013. That trend is not slowing down either. The last reporting period, from June 2013 to Sept 2013, saw an increase of 727,000 members.
When the mega’s stop silly shit, like $5 monthly fees on debit cards, maybe their members will stick around and not go to CU’s.
Here are the orifices you can choose from… but I’ll warn you that it requires being able to interpret big numbers:
JP Morgan deposits were up 8% to $461.1 Billion in 2013 which was a growth rate double what Credit Unions experienced during the same period.
Bank of America reported a $2B profit in their banking division in Q4 2013 which was an increase of 40% from the year prior. The total year profit of $10B was the best performance they had since 2007.
Citigroup increased deposits to $968 Billion in 2013 (larger than the entire CU industry). Their deposits grew 4% higher than the prior year and is the same growth rate as reported by the CU industry.
Wells Fargo deposits grew to $966 Billion in 2013 which is also larger than the entire CU industry. The total average core checking and savings deposits were up $50.7 Billion in Q4 which was up 11% from Q3.
What you guys aren’t understanding is that many people who have joined Credit Unions never bothered to close their accounts at the banks and are members of both (I myself have been in this position as are many people I know). Secondly, many who did move didn’t do so by choice (some banks closed accounts of those customers which were routinely overdrafted after the whole overdraft fee debacle).
I know it is a popular viewpoint to hate big banks… I get it. I know it is also popular to believe everyone is closing their accounts at these “big evil institutions who have ruined our economy” while moving funds to Credit Unions where the lobbies are filled with rainbows and unicorns and where they actually pay you in Shrute Bucks to remain a customer even if you only have six bucks in your account.
That’s cool – Credit Unions are great for many people, but the reality is the banks aren’t losing customers – and those customers that are leaving aren’t exactly the customers that banks really tend to care about.
Sorry bro – that’s just how it is. The people paying $5 a month for a debit card do so because they don’t have the minimum balances required to get a free account. In most “big evil banks” that can be as little as $500 combined between checking and savings, and if you have a credit card or auto loan or mortgage they might even wave that. The point is, if someone has less than $500 in the bank, the bank isn’t making money on that customer because the processing and maintenance costs for clearing checks, operating the ATM network, and printing/mailing monthly statements is far more than they can make from loaning that few hundred to someone else.
You won’t find a bank to admit it, but trust me – banks don’t want certain customers. Credit Unions don’t either, but nobody is going to turn someone away if they want to open an account (and legally you can’t even if you wanted to). So by all means interpret the data how you wish, but if you honestly believe people are ditching banks and flocking to credit unions as you seem to be suggesting, you might want to actually look at the numbers CUs are reporting.
Credit Unions claim their deposits increased by about $38 million in 2013. They also mentioned they gained approximately 2 million new customers during the same period.
Have you bothered to do the math on that one poly? If we assume 100% of the growth in balances is attributed to the new customers, that tells us the average new customer had a balance of less than $20. Say what you will, but there is a reason the big banks aren’t too concerned over the typical consumer who decides to switch from one of them to a local CU. Meanwhile the family who has an online brokerage account greater than six figures and who retains $25k in their savings account at any given point… yea – they are still sitting with the big guys.
I’m sorry you guys continue to try to make this a big bank vs. the local credit union issue… but I realize you can’t help yourselves as the media has done a great job of paving the easy road to the point you might think what you’re saying is actually true.
and those customers that are leaving aren’t exactly the customers that banks really tend to care about.
Really? First things first. The mega’s you are carrying water for are the same mega’s we, the taxpayers you don’t seem to car about, had to bail out to the tune of billions.
Second. For customers you don’t seem to care about or rate as second hand trash, you sure have wasted a lot of your handlers time here the last couple of days carrying their water.
Ah yes, the tried and true “carrying the water” response from Poly. I should have predicted that would be the case since you aren’t about to admit your numbers were complete nonsense when someone counters your statements with actual facts.
Sorry I had to be the one to do the math for you Poly, but hey – since it seems to make you feel so much better about yourself, you feel free to continue resorting to ad hominems while ignoring the core issue. I’ve seen you do it to rufus, I’ve seen you do it to Sy, I’ve seen you do it to me… I don’t really expect an actual conversation when someone has facts in support of their position, but thats fine – haters gonna hate.
Nothing wrong with the numbers I posted in #22. You seem to think all the new business CU’s are generating are castoffs the mega’s don’t want. LOL. Then why the big push by you and yours to thwart CU’s?
Craig – speaking of “not for profit tax exemption” status – how much in taxes did all those highly profitable banks pay on all that profit anywho? 🙂
The point was Poly, you attempted to claim I was making things up which weren’t true (you used a rather clever way of saying I pulled it out of my ass if you recall). I provided the data to support my position, and on top of it showed that the great numbers you were trying to claim proved CU membership was on the rise were in fact on par with the growth being experienced by banks.
When shown such information, a man might have admitted he wasn’t seeing the entire picture and thanked me for telling the other side of the story, but I suppose that isn’t your style. You would rather just change the subject or accuse someone of transporting H2O. Whatever suits you… we both know of this pattern.
By the way, my belief that financial institutions should pay income tax has nothing to do with my employer or my personal banking preferences. In fact, I don’t have anything to do with the retail side of banking.
Nope – instead it is just due to my desire to simplify the tax code, ensure non-profit statuses aren’t abused, and reduce the deficit. It is really that simple. If you think I’m trying to convince the 12 people that are reading this post to suddenly write their Senators and demand CU’s pay taxes you’re off base. It isn’t about carrying anyone’s water or following the company line – it is about expressing a personal opinion and attempting to have a discussion regarding the pros and cons.
Yes I know… I should have known better.
@rufus – honestly I’m sure you can look it up yourself just as well as I can, but if you think I’m trying to suggest banks pay enough taxes or too many taxes you too are off base.
I’ve never defended corporate tax shelters, loopholes, or havens that allow many of this nation’s largest companies to pay little to no income tax. I’m all for simplification of the tax code (both personal and corporate) in order to ensure companies big and small pay their fair share, and I’m very much a supporter of a progressive (tiered) tax code.
Also it bears repeating that i would support the idea of tax-exempt credit unions if they returned to their core mission of serving under-served areas or focusing upon those with limited incomes instead of how the industry is lobbying to increase their business lending cap.
The way it is now, many people of limited income are regular customers of payday loan centers. This is a prime opportunity for Credit Unions, just as underserved areas such as our Native American Reservations would be… but instead of getting back to what their original mission is, their lobbyists have decided it makes more sense to focus upon business lending. This is why I can no longer support the idea of a tax-exempt status for the industry – especially at a time when Congress is looking to eliminate personal income tax deductions as they attempt to find ways to balance the budget.
There was a movement for people to move accounts, but over time that movement REVERSED itself so it is a moot point.
What is it about these words, your words craig, that you don’t get? I showed you as per post #22 you are pulling s*** out of your a**.
And the carrying water thing? I reserve that for those who actually do carry water. You being one of them for the the mega banks.
You say I’ve said the same about Sy. Well, I respect Sy more than you can possibly imagine, and if you can provide us with any proof that I’ve called him a water carrier, PLEASE, by all means, prove it.
You, my mega bank apologist, are a water carrier. The last guy on here I called a water carrier was another mega bank employee and apologist that went by the handle of costner. He or she also had Leo Tolstoy posts here, just like you.
Hmmmmm.
Sorry Poly, my statements are still accurate. I’ve shown you the numbers that prove the big banks are actually gaining deposits even faster than the credit unions. But you don’t want to hear that because it goes against your narrative.
I have also pointed out my views on the whole nonprofit movement and said several times this isn’t about big banks versus credit unions but rather the entire concept of a financial institution being nonprofit.
So what do you do? Do you want to engage in a discussion about the issues or perhaps even admit that you didn’t know the whole story? No… That isn’t how poly rolls. Deflect, deny, and shift the focus to the poster rather than the information. Toss in a few ad hominem’s and insults and call it a day right?
No thanks Poly. I know trolling when I see it and since it’s quite obvious you aren’t interested in having an actual adult conversation I see no reason to continue engaging you. Feel free to have the last word and toss in a few more ad hominems if you must.
Craig. What I was trying to put forth is the fact that CU’s are still gaining new members each month. Numbers in the hundreds of thousands. Perhaps you are right and these new members are the castoffs of the mega’s, but if that is true, why do you care?
Now that we are on the back pages of this blog, and you and I are the only two likely reading this, I suppose I can explain my true feelings about mega’s.
Several years ago my 33 year old son started having health problems and was missing a lot of days of work over a half year period because of it. That’s when we found out he had a very aggressive cancer that had mastisized in his chest cavity. He had a emergency operation that removed the tumor pressing against his heart behind his chest cavity. He started twice weekly chemo sessions that lasted for six months. The whole ordeal cost him about 18 months of work before he could resume. During that time my wife and I aided in his battle by picking up his house payments and other financial matters to help ease his pain and suffering. One thing he and his wife never told us about, prolly cause they felt so overwhelmed by it was a Wells Fargo credit card bill. They told us about it and found they had a several thousand dollar bill that had just a few hundred dollars worth of purchases and had multiplied itself many times thru clever billing policies that only the mega’s are capable of pulling off. Went to the bank with my kids to see if there was a way to pay off just the principle of their actual purchases. WF would have nothing to do with that. They wanted all of their blood money. I wrote the check and vowed I would never forget. So now you know why the reason I post every chance I get about fee harvesting mega’s.
Just a sampling of what mega’s are capable of. I could add accounts like this for days and days, but I doubt you or any of your kind actually care.
http://ourfuture.org/20100812/wells-fargo-overdraft-scam-makes-elizabeth-warren-more-important-than-ever