A change to the tax status of large credit unions will impact small credit unions as well, Freedom CU President/CEO Ken Payne wrote in Credit Union Journal Friday. Payne’s op-ed on how credit unions are stronger together comes as bankers are ramping up attacks on the credit union tax status.
“Encouraging Congress to review the tax exemption of large credit unions is the equivalent of letting the camel's nose into the tent. It lends unwarranted legitimacy to the bankers' arguments that somehow large credit unions are fundamentally different from small credit unions, and therefore unworthy of their tax exemption,” Payne wrote. “Small credit unions who buy into this fallacy do so at their own peril. Allowing our movement to be internally divided into an ‘us vs. them’ mentality may sow the seeds of our own destruction.”
Based in Provo, Utah with $36 million in assets, Payne says it would be harder for his credit union to exist without large credit unions.
“Large credit unions force me to get better. There’s no question – it is tough to compete with the largest credit unions. They have economies of scale that allow them to pay a lower marginal cost for nearly every service they provide…But so can Wells Fargo or any other multi-billion-dollar for-profit financial institution,” Payne wrote. “Rather than complaining about what my large counterparts are doing, I have to remain nimble and focused on providing a compelling reason for consumers to choose to do business with us.
“Competition from successful institutions of any size forces me to adopt or adapt, and consumers benefit from that, regardless of whether they are credit union members,” he added.
Payne went on to highlight how large credit unions can help smaller credit unions, noting that in Utah, “the largest credit unions have been active supporters of smaller credit unions, sharing expertise and supporting our efforts to remain viable.”