From MARK KARLIN
Thanks to Janie Sheppard
[When the Big Banks took our economy down the tubes, we switched our bank accounts to Credit Unions in droves. Now they are pissed and want to snuff out the competition, which are democratic cooperatives. We won’t let them. Here’s what we can do: Don’t Tax My Credit Union -DS]
Given the steady growth of consumers turning to responsive credit unions for their banking, the oligopolistic banks that brought you the crash of the American economy – and made you lend them money to survive – are now trying to crush credit unions.
The vehicle being used by the large financial institutions — many of whom are still engaged in risky and unethical if not illegal actions – to remove credit unions as competition is to get their pawns in DC to pass legislation that will remove their tax exemption.
According to a July 6 LA Times article:
The tax exemption is crucial to credit unions, which by law can’t raise capital through public stock offerings the way that banks can, said Fred R. Becker Jr., president of the National Assn. of Federal Credit Unions, a trade group with about 3,800 federally chartered members.
“They’ll have to convert to banks, which is what the banks want,” he said. “Then they’d have, for lack of a better term, a monopoly.”
A 2012 economic study commissioned by the trade group found that removing the tax exemption would cost consumers about $10 billion a year through higher fees and interest rates on loans, as well as lower interest rates on savings.
That loss of income would end up costing the federal government $1.5 billion a year in lost tax revenue, the study said.
Why the sudden legislative power play to eliminate credit unions from encroaching on the Monopoly board of the banks/financial institutions that pull the strings in DC? You can find the answer by reading a bit down into the LA Times story:
The [credit union] industry has grown significantly since the 2008 financial crisis, boosted by outrage over Bank of America’s 2011 plan to impose a $5 monthly fee for debit card use.
Bank of America ditched the plan after protests from customers, lawmakers and the White House. But the controversy led consumer groups to launch an effort to get customers of big banks to switch to smaller institutions, such as credit unions. And the effort helped.
By the end of March, credit union membership surged to 95.7 million, an increase of 2.7 million from the start of 2012, according to SNL Financial. The growth in those five quarters was more than in the previous 11 quarters combined, the trade publication said.
Navy Federal Credit Union, the nation’s largest, increased its membership 10.2% to 4.3 million in the year ended March 31. Such large credit unions, which have ramped up their advertising to lure new members, worry bankers.
If the LA Times article is correct, nearly 1/3 of the US population used a credit union instead of the handful of hybrid bank/financial institutions that call the shots on Wall Street and in the nation’s capital on consumer fiscal policy and lending.
Credit unions have traditionally tilted toward banking policies that serve the interests of their members, providing products that are competitively priced and emphasizing service over ill-gotten profit. They are consumer oriented rather than shareholder and CEO compensation (and bonus) driven. That’s because, in essence, members of a credit union are its shareholders (although not in a technical legal sense, but in terms of distribution of net revenue.)
So despite the big banks whining about competition from credit unions who actually serve the best financial interests of their customers, the LA Times has a sentence in its piece that gets to the heart of the matter: “Credit unions said the effort to take away their tax exemption was simply an attempt to stifle competition and remove one of the only checks on bank fees for consumers.” [Italics inserted by BuzzFlash at Truthout.]
The American Banking Association is backing its legislative assault on credit unions with a blitz of radio and print ads in DC, according to the LA Times. But the credit unions know that what they are up against in this battle for financial consumer rights is how many people in Congress are owned by campaign funds given or raised by the Wall Street banking mafia.
If the credit unions lose this battle, the US Capitol should be redesigned to resemble a Bank of America ATM machine.