BOSTON—Following a report published by bankers in Massachusetts that questioned whether credit unions were taking advantage of a “loophole” that poses a risk to safety and soundness, NAFCU has responded by saying that the study does not even merit consideration.
The study, produced for the Massachusetts Bankers Association by PolEcon Research, termed CUs’ low-income designation as "a significant loophole that could become a greater risk if these institutions are allowed to expand exponentially with no limits on commercial lending or membership," the Worcester Business Journal reported.
The study also alleged that credit unions do not have to document service to low and moderate income individuals to qualify for federal and state corporate income tax exemptions, the news outlet reported.
“This study does not even merit serious consideration given that it is bought and paid for by the bankers,” said NAFCU President and CEO Dan Berger. “It is a brazenly biased attempt on the part of the bankers to sully credit unions’ reputation with contrived findings. If bankers expended as much energy and effort addressing their questionable practices as they do attacking credit unions, perhaps they would not have racked up more than $136 billion in fines, settlements, mortgage buybacks and relief to borrowers in the years following the financial crisis. Ironically, these can often be written off as tax deduction for the banks.”
NAFCU noted that numerous third-party studies champion credit unions’ not-for-profit, member-focused business model.
“Credit unions’ customer satisfaction continues to top most industries based on the CFI Group September 2015 Credit Union Satisfaction Index,” NAFCU stated. “Additionally, Bankrate’s 2015 Credit Union Checking Survey showed that 76% of credit unions offer free checking accounts. That’s approximately twice the rate of free checking that the study found at banks. Moreover, a 2011 study commissioned by SBA’s Office of Advocacy found that during the 2007-2010 financial crisis, while banks’ small business lending decreased, credit union business lending increased as a percentage of assets.”
“Putting members first is part of the value proposition at credit unions. That’s why we continue to see more and more people join credit unions,” said Berger. “Bankers would do better to work with us to tackle the issues of much-needed national data security standards for retailers and regulatory relief for financial institutions than trying to undermine credit unions. These two issues are taking an extremely heavy toll on the financial services industry.”