What The Banks Are Up To

The e-mail from the American Bankers Association earlier this month landed in the boxes of Senators, U.S. Representatives and their staff members with a thud.

The topic: The credit union tax exemption-again.

"The never-ending feud," was likely mumbled by more than one congressional staff member as she or he pressed the delete key to send the bankers' e-mail to the trash folder.

But, the truth is we credit unions are not engaged in a feud at all. We know that the credit union tax exemption is good public policy, returning 10 times the tax revenue value to consumers in better rates and lower fees. That's a benefit 96-million American credit union members value.


The Real Target

It's the bankers and their lobby who fuel the "argument," largely to obscure their real target: Stopping credit unions from enhancing their charters so that they have the option to provide even more services to their members (through business lending, or-in response to member growth-by adding supplemental capital).

Surely the bankers know what we know: That Congress has little appetite to tax 96 million Americans, which is exactly what would happen if Congress were to tax credit unions. And our 96-million members surely don't want to be taxed!


What Are The Banks Up To?

So ... why do bankers take the approach that they do?

Their gambit is that many members of Congress-and their staff members, many of whom are new-haven't the time or focus to see the policy good that we see with the tax exemption.

Banks also bet, with some justification, that most constituents of members of Congress are uninformed as well about how the tax exemption works in their favor-whether they are credit union members or not.

The banks should lose both of these wagers. And they will-if we, all of us, engage in educating Congress and our members about what the tax exemption means to them.

And we have the power to do that: By illustrating the value and trust that credit unions offer their members.

This week, as more than 4,000 credit union advocates and supporters course through the halls of Congress, there are two crucial points that must be made in their meetings: Credit unions return real value-to their members and to consumers at large. CUNA estimates that in the one-year period ending September 2012 CUs provided $5.8 billion in direct financial benefits to their members. Those benefits were delivered in the forms of lower loan rates, higher returns on savings and fewer, lower fees than those charged (or earned) by banks.


The Trust Factor

And CU competition with banks acts to drive down loan rates, increase earnings on savings, and limit fees at banks-resulting in an overall savings to consumers of more than $8 billion last year.

Americans trust credit unions. In survey after survey conducted by third-party groups, credit unions come out ahead of banks as most trusted. A recent example: The Chicago Booth/Kellogg Financial Trust Index (released in November) showed credit unions the most trusted financial institutions (over big, national banks and local, community banks, too).


Defend & Protect

It's tremendous to get these messages out to lawmakers and their staffs during the GAC. But there are equally important audiences that need to hear, and understand, what we are saying-especially credit union members.

Because they are, ultimately, the best spokespeople we have.

The banks may be losing some credibility on Capitol Hill with their constant carping about credit unions. But make no mistake: They remain a formidable force.

And banks aren't totally clueless either-they understand that tax reform is a hot topic in this Congress.

Any time tax reform comes up, credit unions-all of us-must be ready to defend, protect and preserve our tax exemption. The best action we can take, at this point, is to ensure that our members and our lawmakers hear about and understand the value we offer consumers, and the trust consumers have in us.

If we can deliver and repeat those messages over and over, future e-mails from banks to Congress won't land in the e-mail box. They will go right to the junk e-mail folder, where they belong.

Bill Cheney is president/CEO of the Credit Union National Association.