For more than 100 years, credit unions have existed because banks ignored consumers in need of safe, affordable financial products and services. Since the first credit union was founded in 1909, banks have tried to hold our industry down. With misleading surveys and wolf cries against the industry’s tax-exempt status—data from the Congressional Joint Committee on Taxation has proven the benefits of the exemption—it’s like the professional arsonist complaining that the volunteer fire department does too good of a job cleaning up their mess.
Credit unions were created to solve a problem caused by banks. As more and more Americans see the credit union difference, banks have grown desperate in their attacks. They want to limit competition because they refuse to change their ways.
It’s clear credit unions take care of their members and communities, while banks leave communities behind as they chase bigger profits for their executives. Banks decreased their branches by a net 7,500 locations over the last four years, while credit unions have opened a net 700 branches.
Not only are banks leaving communities behind, they also pull back on lending when times get tight. Plus, if profits don’t pan out, banks try to evacuate as quickly as possible—just look at Goldman Sachs’ regret for partnering with Apple in consumer lending. Credit unions again step up to meet the needs of members and small businesses.
Credit union lending was 15% higher than banks’ in the years following the 2008 financial crisis. Following the COVID pandemic, more than 70% of credit unions’ Paycheck Protection Program (PPP) lending went to businesses with five or less employees. The average credit union PPP loan was $50,000, going to Main Street businesses, many of which couldn’t get a PPP loan from their bank.
Credit unions have an enviable record of lending to those of modest means despite significant field of membership restrictions. Forty percent of credit unions have community charters, but all credit unions made a larger share of their mortgage loans than banks did to Black, Hispanic, and low-to-moderate income borrowers, according to 2022 Home Mortgage Disclosure Act data.
Polling of consumers around the country indicates credit union members have higher achievement across every metric of financial health, and the results are consistent across all demographic groups.
CUNA’s 2023 National Voters Poll unambiguously reveals credit union members view their credit unions much more favorably than nonmembers view their banks and other service providers. This is true across every performance metric evaluated.
A recent survey by the American Bankers Association misses the real story: the credit unions improve the financial health of members and communities, and the data backs it up.
The differences arise from credit unions’ more cooperative approach, more consumer-friendly pricing, thoughtful products and services and an overall sense of trust fostered by these member-owned institutions.
Credit union members are 1.5 times more likely than nonmembers to say they have received personalized financial education/counseling, and are 1.6 times more likely to say they trust their financial provider and it has improved their financial well-being.
Credit unions continue to work with lawmakers and regulators on policies that will let our industry help those banks have left behind. Data shows the amount of census tracts considered “banking deserts” have increased 60% since 2012. In addition, a NAFCU-commissioned independent study found that eliminating the credit union tax exemption would have significant negative effects on the country, including a $120 billion reduction in GDP over the next 10 years and nearly 80,000 jobs lost per year in the same period.
Banks are fine with that, but credit unions are working hard every day to promote economic prosperity for all Americans.
Congress has a lot on its plate right now and shouldn’t waste a second of time on one of the most powerful pro-consumer forces in our country.
