Credit Unions are Different—They Value People Over Profits
May 10, 2013
May 3, 2013
Troy Stang, Guest Opinion; Portland Business Journal
Nearly 1.4 million Oregonians are credit union members because they appreciate better interest rates and personalized service that comes from doing business with local, member-driven, not-for-profit financial cooperatives.
Higher savings rates and lower fees and interest on loans all add up. In fact, Oregon credit union members saved an average of $152 per household in the 12 months ending in December, 2012 — totaling $110 million in benefits to members statewide.
In many ways, credit unions still operate exactly as intended when President Franklin D. Roosevelt signed the Credit Union Act of 1934. Back then, bank industry greed had plunged the nation into the Great Depression and American consumers demanded a not-for-profit alternative to the profit-hungry banks.
Today the envious bank lobby is trying to take the credit union option away from you.
The Oregon Bankers’ Association is pushing a bill in the state Legislature that would impose extra regulatory burdens and expenses on credit unions. If the bill should pass, it could force some credit unions to eliminate services and drive up the cost of others.
The logic for this is confounding. In an April 19 guest column in The Portland Business Journal (“Credit unions unfairly receive tax subsidies”), Oregon Bankers Association CEO Linda Navarro opined that credit unions have become “indistinguishable” from banks because of their growing membership base and sophisticated financial product offerings.
Yes, credit unions are growing and offering a portfolio of services because of consumer demand. And here is where credit unions continue to distinguish themselves from banks: they pay their members, instead of stockholders. They did not engage in the risky, irresponsible big-bank behavior that nearly brought our economy to its knees in 2008 and required tens of billions of taxpayer dollars to bail them out.
Every day Oregon’s credit unions are serving their communities. They are doing many great things, such as raising more than $12 million for Doernbecher and other Children’s Hospitals in Oregon since 1986, volunteering at local food banks, teaching financial education in schools, and donating materials and labor to build homes for disabled returning war veterans.
Given all that credit unions do, it is not surprising that a poll, conducted by Voter/Consumer Research in January of this year, found 90 percent of Oregonians had a favorable view of credit unions while banks had only a 53 percent favorable rating. The poll also found that 82 percent of Oregonians believed that credit unions, regardless of size, should not be taxed more than they already are, because their cooperative structure allows them to return tangible benefits to members. There’s still a chance for you to weigh in at www.saynotobigbanks.com. Sign our online petition and give the Legislature confidence in the not-for-profit financial service choice for consumers.
Finally, Ms. Navarro also criticized some of the state’s highest performing credit unions for paying for top managerial talent. Credit unions do not have stockholders—therefore, there are no stock options to pay. However, credit unions do pay competitive salaries in order to be able to recruit and retain strong leaders who will ensure the integrity and operations of their cooperatives for years to come. Period.
When all other banker-backed cries for credit union taxation are shut down by logic and a supportive public, the bank lobby typically turns to the argument that mutually owned savings banks are similar to credit unions but pay taxes. If being subjected to the same regulatory environment as the big banks is oppressive, if the tax burden gets in the way of great customer service, and if big-bank behavior makes no sense for mutual savings and community banks, I have a bold invitation for them — convert to a credit union charter.
Troy Stang is president and chief executive officer of the Northwest Credit Union Association, the trade association serving the credit unions of Oregon and Washington and their nearly 4.4 million members.
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