The banking industry is on the offensive again, attacking credit unions with print and radio advertisements.
"The country faces a financial crisis, and credit unions refuse to help," Frank Keating, president and CEO of the American Bankers Association, says in a new ad that highlights the federal tax exemption that credit unions enjoy.
The advertisement is part of a larger campaign aimed to rally support against a proposal that would expand credit union lending powers. Community banks worry that more credit union lending will take their business, which is a fair concern.
I'm not sure where I fall in the debate over giving credit unions bigger lending powers. However, I wouldn't agree with Keating that credit unions "refuse to help" in the midst of financial struggles. With low interest rates, credit unions keep the costs of buying a home or a car low for their members, which is exactly the kind of help many consumers need. They keep everyday costs low, too. According to Bankrate's 2012 Credit Union Checking Survey, 72 percent of the nation's not-for-profit institutions offer no-strings-attached free checking accounts.
Not surprisingly, credit union supporters are fighting back against the claims from banks. In a letter to Capitol Hill, Brad Thaler, vice president of legislative affairs, National Association of Federal Credit Unions, writes that Keating's words are "a remarkable and ironic statement considering the nation's banks are the ones that engaged in the risky lending that led to the financial crisis."
While the banking industry continues to call for Congress to review tax exemptions for credit unions, Thaler writes that repealing their tax exemptions would have dire consequences.
"Altering the tax status of member-owned credit unions would have a devastating impact not only on the 95 million credit union members across the country, but also on consumers in general," Thaler writes.
What would that impact look like?
According to the Credit Union Federal Tax Exemption Study conducted by the NAFCU in 2012, eliminating tax exemptions for credit unions would result in a loss of 150,000 jobs per year and an overall decline in the nation's gross domestic product by nearly $150 billion over the next decade.
What do you think of the debate? Have credit unions helped you?