Community financial institutions are a quintessential part of Main Street USA, CUNA Chief Advocacy Officer Ryan Donovan wrote in Credit Union Journal Monday, and when local banks close it is a loss for the community. Those bankers take their commitment to the community serious, Donovan says, which is why many of them turn to credit unions when it comes to sell their banks’ assets.
“[Banks selling to credit unions] allows their customers retain a local financial partner and reap the benefits that credit unions provide — better loans, fewer fees and the understanding that the members, not bank shareholders, are the center of the business,” Donovan wrote. “Selling the bank to a Wall Street bank rather than a credit union would basically be turning over the keys to a stranger with very different motives.”
Donovan points out that credit unions have a proven track record of opening and retaining local branches which appeals to community bankers looking to ensure continued access to financial services within their community. Credit unions opened more than 1,500 branches since 2004, while banks closed more than 4,700 in that same time period.
“Ensuring continued service to the customers, employment to the staff and commitment to community is precisely what credit unions should do when a local bank is ready to close shop,” Donovan wrote. “Expanding opportunities for more Americans to access safe and affordable financial services from a not-for-profit cooperative is the definition of fulfilling the credit union mission – to promote thrift and provide access to credit for provident purposes.”
Instead, Donovan says, banks selling to credit unions have been the latest subject of attacks from the big banks as “thinly disguised efforts to undermine” credit unions’ work in local communities.
“We understand that our model is different: we return value to our members while banks – big and small -- are tethered to the interests of their shareholders,” he wrote. “That’s their model, and we have ours. Our people-helping-people model will always put members and communities first. It’s why credit unions are advancing communities and empowering financial well-being.”