WASHINGTON—The recent decision by the National Football League to give up its not-for-profit status is another reason why credit unions should surrender their similar status, according to the president of the American Bankers Association.
In an op-ed published by Roll Call, the newspaper focused on Capitol Hill, ABA President Frank Keating said, “I must applaud the NFL for voluntarily deciding to reorganize in a way that will stop abusing the tax code, as the league knew its tax status was an unnecessary distraction from its goal of providing a high-quality football experience for fans.
“Now that the NFL has neutralized this issue, Congress should take a look at another outrageous tax exemption: the one that allows multibillion-dollar credit unions that function just like taxpaying banks to avoid paying any federal taxes whatsoever,” Keating continued. ”This tax break for a trillion-dollar industry cost taxpayers $20 billion over 10 years.”
Keating wrote that Congress originally granted credit unions their tax exemption in order to serve people of “modest means” and who share a “meaningful common bond.”
“But for many big credit unions, those days are long past. There are now more than 200 credit unions with more than $1 billion in assets, and those very large credit unions account for nearly two-thirds of the credit union industry’s profits,” Keating opined. “Credit unions have decided they can dispense with “common bond” restrictions, some of which are already so loose that they include whole states. I have seen countless examples of credit unions advertising that ‘anyone can join’ — using a loophole that allows new members to join an association whose main purpose, by all appearances, is to make people eligible to join a credit union. Call it member-laundering.”
Keating said what’s “even more outrageous” is that numerous CUs are using “members’ profits (and taxpayers’ foregone revenues)” to buy multimillion-dollar naming rights to stadiums and arenas, including access to luxury box seats, and building “elaborate skyscraper headquarters for themselves.”
Keating went on to state that a “tax break designed specifically to encourage credit unions to serve low- and moderate-income people (would mean) credit unions would excel at that mission. But they don’t.”
“Nearly half of credit union members are upper-income. Just 31% of credit union customers fall into the low- and moderate-income categories; by contrast, 40% of bank customers do,” Keating said.
The ABA president concluded, “I have no problem with the many credit unions that hew to their original mission, honor their common bond and serve people of modest means with unique financial needs. But like the NFL, the big credit unions that continue to abuse their tax privileges should voluntarily agree to pay. And if they don’t, Congress should insist on it.”