CHICAGO–A slick website has been created that seeks to challenge the value of credit unions and the “risk” from credit unions to the American taxpayer, and which suggests money saved from the tax exemption is not going where Congress is intended.
The website, explorecreditunions.com, does not include information on who is behind it, and the site itself has been registered by a proxy, but all of the language used and arguments made strongly mirror those used by the banking industry in its attacks on credit unions. As the banking trade groups have also sought to do
recently, the site appears to attempt to drive a wedge between large and small credit unions.
While the site gives the appearance of being aimed at consumers, its real audience appears to be members of Congress, with Congress called on throughout the site to address the credit union tax exemption.
‘Strayed From Original Mission’
“Eighty-plus years (after the FCU Act), it has become increasingly clear that the largest credit unions have strayed far from their original mission while credit union regulators have turned a blind eye,” text on the site reads. “Their regulators readily rubber-stamp the steady mission creep and allow credit unions to offer services far beyond their initial charter.
“Today, there are 304 large credit unions that each have more than a BILLION dollars in assets but are required to pay ZERO in federal income taxes,” the text continues. “Although these billion-dollar credit unions make up just 5% of the credit union industry, they enjoy 75% of the tax benefit, leaving small credit unions who have stuck to their original mission at a competitive disadvantage.
“And even more alarmingly, American taxpayers are poised to make up for credit union tax exemption to the tune of more than $20 billion over the next ten years. That’s $20 billion that could be used for important federal programs or to shore up the federal deficit.”
‘The Jig is Up’
Beneath text that reads “The jig is up. It’s time for large credit unions to pay their own way” appears a large blue block, reversed out of which a headline reads, “You pay federal income taxes. Why don’t large tax-exempt credit unions.”
The site includes an attack on the merger between Pentagon FCU and New York-based Progressive Credit Union, a taxi medallion-lending CU that was struggling with profitability, that is headlined, “NCUA’s Failures Drive PenFed’s Greed.”
A separate article headlined “Money is Power, and NCUA is About to Have None,” reads, “Once again credit unions are gaming the system, this time by trying to defund their own regulator. Large credit unions pushed for several provisions in a new financial deregulation bill that would allow them to assess NCUA’s budget, and basically enable them to shame the NCUA into cutting parts of the budget the industry feels are ‘unnecessary.’ So, in a nutshell, large credit unions would essentially regulate their regulators. What a country!”
In a separate section of the site, the text suggests the CU tax exemption is being “squandered on marketing expenses, aggressive growth, and big-name sport and entertainment sponsorships. Unfortunately, that’s what is happening at the largest credit unions today.”
Among the statements made on the site:
- “The aggressive marketing tactics used by large credit unions, such as sponsoring professional sports teams, stadiums, concert venues, and convention centers, are the types of marketing efforts employed by Fortune 50 companies, not nonprofits.”
- “Larger, tax-exempt credit unions are increasingly and brashly buying out smaller credit unions and community banks, which raises significant tax policy questions.”
- “Large credit union CEOs can make up to $11 million annually. Congress intended the tax subsidy of these nonprofits to be used to benefit consumers, not to reward CEOs.”
- “Instead of focusing on the financial needs of low- and moderate-income individuals, the purpose for which credit unions were created, many credit unions are using their tax exemption to subsidize financial services for massive corporations and wealthy individuals.”
A ‘Quiz’ On CUs
The site also includes a “quiz” to be taken to “test your knowledge of credit unions,” as well as a state-by-state breakdown of how much is paid in federal income taxes by the average person vs. how much federal credit unions in that state paid in federal income taxes.
In a section on the “lavish” lifestyle of some credit union CEOs, the site does include links to the blog hosted by Keith Leggett, the former SVP/economist with the American Bankers Association. The link includes a list of the highest-paid CEOs in credit unions as compiled by Leggett.