A credit union director in Mexico, Missouri is weighing in against an attack by American Bankers Association (ABA) CEO Frank Keating in a national Congressional blog.
Patrick Donovan, a director for United Credit Union, wrote a letter to the editor in response to Keating’s November 28 opinion piece opposing credit union member business lending efforts. Donovan’s letter was posted on The Hill’s Congress Blog on December 3.
Donovan writes, in part:
Quite simply, Mr. Keating is cherry picking and misstating facts to avoid the simple truth: Credit unions are working to support our small business owner-members who have been denied by local, regional and national banks. Credit unions are currently prevented from helping more small business owners have that opportunity due to the arbitrary lending cap.
Mr. Keating also states that this is really about freeing “[credit unions] from important regulatory safeguards that are intended to reinforce credit unions’ mission, safety and cooperative nature.” I find it interesting that for the first 90 years of credit union history, this particular safeguard was not needed until the banks were able to press for its inclusion in the 1998 Credit Union Membership Access Act.
Keating claims that credit unions don’t pay taxes and have an unfair tax advantage. Credit unions are organized as not-for-profit financial institutions. Credit unions don’t pay federal income taxes on profits due to that structure, but they pay payroll taxes, property taxes, and a number of other taxes. The boards are unpaid, democratically elected volunteers from the membership and work to return any “profits” to the members in the form of lower rates on loans, higher rates on savings, and sometimes deposits into the members accounts at the end of the year if they have excess revenue. Ever heard of a bank doing that? Credit unions are different from banks due to their not-for-profit structure and social mission of helping America’s working families succeed financially.
Click here to read Donovan’s entire letter.
Keating’s initial posting is also available online. In response to the Keating letter, credit union representatives from Missouri and across the country posted comments.