WASHINGTON (9/8/14)--The real reasons behind credit unions' success are their cooperative ownership structure as well as a good amount of public trust, reminded Credit Union National Association interim President/CEO Bill Hampel.
In a Friday column in American Banker, Hampel responded to American Bankers Association President/CEO Frank Keating's rehashed "talking points" on credit unions' tax status. Keating's comments were published in a Sept. 3 American Banker "BankThink" piece.
"Because of credit unions' cooperative ownership structure, any excess profits they earn are redirected back to all members in the form of lower loan interest rates and higher savings yields," Hampel said, adding, "In fact, funneling profits back to members is exactly what credit unions were formed to do in the first place--and that is why credit unions have the tax exemption."
Credit unions were chartered with the goal to ensure consumers have access to affordable financial services, he said.
And, credit unions are succeeding in their mission, Hampel said. Earlier this summer, credit unions marked 100 million memberships--a milestone "built on several years of very strong membership growth ... driven in part by growing consumer dissatisfaction and distrust of banks in the aftermath of the financial crisis."
Last week, the Chicago Booth/Kellogg School FinancialTrust Index reported credit unions with a higher trust score than banks, with about 60% saying they find credit unions trustworthy, and only 30% say they trust big, national banks (News Now Sept. 3).
"Perhaps Mr. Keating always comes back to his talking points on taxes because it is easier to criticize credit unions than admit to losing ground to them," Hampel said. "The data shows consumers are increasingly turning to credit unions for financial services.
"Bankers try to change the subject to taxing credit unions, but maybe it is consumers who are really changing the subject--with their feet, by walking into credit unions."