WASHINGTON—In response to a banking trade association’s request that Congress investigate credit union growth and the industry’s tax-exempt status, NAFCU is telling Washington that banks should “look in the mirror” to understand why Americans are turning to credit unions for financial services.
“In recent years, banks have been closing branches, turning customers away, and even repeatedly been fined billions for abusing and defrauding their customers,” NAFCU Senior Vice President of Government Affairs Greg Mesack wrote to lawmakers. “…[T]he top five big banks alone have paid over $200 billion in fines in the past two decades. Multiple banks have admitted to defrauding their customers by creating unauthorized bank accounts to boost profits. Likewise, in the past 5 years banks have closed over 7,000 branches in rural underserved areas so they can focus on wealthy coastal cities.”
Data ‘Contradicts’ Bankers
Mesack pointed to data he said “contradicts” bankers’ arguments – showing that credit union deposits are a steady reflection of growth in the U.S. economy, credit unions in the past decade have increased their presence in rural and underserved areas by +2.4%, while banks have closed branches (-10.8%).
In addition, the letter states the credit union tax exemption benefits the economy by roughly $16 billion each year.
Disclosure Failure
“While these banking groups call on Congress to change the tax status of credit unions, they fail to disclose that the banking industry received tens of billions of dollars in annual tax breaks from the Tax Cuts and Jobs Act,” Mesack wrote. “They also fail to point out that nearly one-third of all banks are Subchapter S corporations and do not pay corporate income taxes themselves. These annual tax breaks for banks far outpace the annual tax expenditure of the credit union tax exemption.”
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