Congress got the credit union “formula” right, American Consumer Institute President Steve Pociask wrote in Inside Sources in response to false banker claims appearing in the Wall Street Journal. CUNA President/CEO Jim Nussle’s response to the banker claims appeared in the Wall Street Journal last week.
Pociask highlighted credit unions’ mission and structure, and how member-owned governance and an emphasis on financial education has made credit unions popular with consumers.
“Credit unions educate consumers on prudent behaviors, such as planning, budgeting and thrift, while providing low-cost loans for consumers to finance major purchases such as automobiles and homes, as well as providing relatively high yields on deposits,” he wrote. “Because credit unions are not-for-profit, any surplus of revenue over expenses is used to improve yields on deposits, to improve services for members, and to lower interest rates on loans. That virtuous cycle explains why 113 million Americans have chosen to rely on Congress’ formula for credit unions.”
He also noted that any change to the credit union tax status would amount to a tax increase on American credit union members, credit union members that CUNA research shows paid $17 billion in state and local taxes in 2017.
“Perhaps most important, credit unions are setting the high standard for consumer treatment that banks should be emulating. Credit unions regularly score high in consumer satisfaction compared to large banks. That validates Congress’ formula for the credit union industry,” Pociask writes. “Maybe Congress should order banks to learn from credit unions’ customer treatment instead of whining about credit union’s tax status.”