Wisconsin CU League News Release - 09/24/09

Banking trade association ignores facts, puts self-interest ahead of consumers

Pewaukee, Wis. – “Not-for-profit credit unions remain steadfast about operating in the best interest of their 2.2 million member-owners and providing services that help build savings and wealth over time, regardless of financial position,” said Brett Thompson, President & CEO of The Wisconsin Credit Union League, the state trade association serving more than 240 credit unions.

Thompson issued this statement in response to The Wisconsin Bankers Association’s (WBA) repeated calls for unnecessary regulation that would prove costly to Wisconsin credit unions and their members. The WBA supports its claims with statistically flawed and misleading studies.

 
In fact, the very study WBA cites used underlying data (prior to its misapplication) that showed credit unions overwhelmingly outperform banks – in 64 of 72 areas of service delivery – a whopping 89% of the service areas that were reviewed. What's more, credit unions' outperformance of banks held true for almost every demographic group and loan type over three years.

"The WBA’s efforts to further tax and regulate credit unions demonstrate that they do not keep Wisconsin taxpayers’ best interests in mind, but instead are focused on eliminating competition and maximizing profits,” said Thompson. “Otherwise, they wouldn’t look to harm Wisconsin credit unions and their members, who save $208 million annually by saving at and borrowing from their local credit unions instead of banks.”

The WBA uses unreliable data to support its position, including a report by the National Community Reinvestment Coalition, which mistakenly assumes that credit unions are intended to serve only the poor. This concept exists nowhere in state or federal law. Furthermore, the NCRC bases its conclusions on a 2006 Government Accountability Office study - another source WBA cites – that has been all but disavowed by the GAO itself, which concluded its data was flawed and that no conclusions about credit unions or the people they serve could be drawn from it.

 
Yet, the WBA continues to ignore federal data and findings from regulators that show that – even without being subject to the regulations banks want to apply to credit unions --  credit unions are outperforming banks in serving underserved groups and fulfilling their real mission – to serve all working Americans. Here are the facts:

• "State-chartered credit unions serve their members in a manner consistent with their history as financial cooperatives serving groups based on occupation, association or community, by charging lower loan rates and providing higher return on savings.” (National Association of State Credit Union Supervisors, 2007: NASCUS Survey of the State Credit Union System)

• “Although no state enabling act establishes as a criterion for organizing state-chartered credit unions an explicit requirement that the institution serve the underserved or low- or modest-income groups, state-chartered credit unions do reach out and provide financial services to all income groups within their fields of membership, both through pricing and community outreach efforts.” (National Association of State Credit Union Supervisors, 2007: NASCUS Survey of the State Credit Union System)

• “Despite changes over time in the law, the economy, technology, and member demographics, [credit unions] have remained faithful to their originally conceived cooperative, not-for-profit, democratic structure.” (National Credit Union Administration, 2006: Member Service Assessment Pilot Program: A Study of Federal Credit Union Service)

• Wisconsin’s low-income mortgage borrowers’ approval rate is 74.7% at credit unions compared to 49.6% at non-credit union lenders. For minority mortgage applicants, the credit union approval rate here is 72% compared to 46.6% at non-credit union lenders. (Home Mortgage Disclosure Data, 2007)

• And although credit unions have only a 10% market share for financial services in Wisconsin, they operate 40% of the financial institution branches in the state’s low-income census tracts. By contrast, 94 percent of all Wisconsin banks – including 12 of the largest 20 banks – have no branches in low income census tracts. (U.S. Census Bureau, FFIEC, FDIC, Wisconsin Department of Financial Institutions, and the Credit Union National Association)

“In addition to paying millions in state and local taxes each year, legitimate studies and data have shown time and again that credit unions are meeting the needs of working Americans,” noted Thompson. “Essentially, what the WBA is calling for is unwarranted, unnecessary, and harmful to Wisconsin families.”
 

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