Brother Credit Union, Can You Spare a Billion?

By Frank J. Diekmann

Diekmann Frank

Well, now you’ve really gone and done it this time, credit unions. There’s no hiding it anymore, no use pretending. Forget about even trying to disappear behind that white hat. You’ve gotten so far away from your “original purpose” America’s banking industry has had to switch to the domestic caviar at their board retreats. It’s. That. Bad.

Have you seen the bankers’ second quarter numbers? Why, no self-respecting CFO could so much as glance at the industry spreadsheet without having to quickly look away in disgust. A skinny $60.2 billion in profits during the quarter, up a measly 25.1% from a year ago? That’s all!? 

It’s intervention time credit unions—time to take a hard look in that cooperative mirror and make that first step by admitting you’ve hurt people—in this case, that despondent silver-haired man in the three piece who’s down to his last couple of stock options and unable to decide whether it might just be a wise move to bag St. Moritz and instead slum it in Vail or Park City with the fam this winter. 

You Were Warned

It’s not like you weren’t warned, credit unions. Oh, no, you’re not playin’ that card. The banking industry and its wailing trade associations have been putting on the full court press with press releases and press conferences to let America know that like an office meeting called to discuss branch strategy that has morphed into an argument over who’s turn it is to clean out the breakroom fridge—we all know it’s you, Steve—credit unions have strayed far from the reason they were created, to serve “people of modest means.”

And now it’s the bankers themselves forced to live modestly, scraping by over three months on that sixty (extra, extra) large that used to be in their customers’ pockets. Maybe that’s the reason the banks are so obsessed with the idea of “original mission”: a bank is chartered for one reason, to make money for its owners, and you have to give it to them, the banks have stayed true to their calling. 

And since we’re coming clean at this intervention, credit unions, let’s deal head-on with the hurt you’ve put on the country’s community banks, who have been trying to get someone, anyone, to hear their last dying gasps from the low end of that unlevel playing field that might as well be a cemetery, thanks to unfair competition from credit unions.

According to the Bad News Bearers over at the FDIC, during the second quarter the 5,111 insured institutions identified as community banks reported a paltry of $6.5 billion in net income, an increase of $1.1 billion—or just 21.1%. Go ahead, if you dare. Try to read that again—just21%. How are you supposed to feed a family of stockholders on that?

It's Kill Bill III

It’s a fiscal blood bath–as if Quentin Tarantino had written and directed a film about balance sheets 


If only credit unions weren’t in the way and all but driving banks out of every market with their unjust tax exemption; then the bankers might be able to post the kinds of numbers that would allow them to hit control-delete on those press releases about the unfair advantages credit unions have, and instead knock out some prose all about all the money they’re banking. Right?

At least one banker hasn’t allowed the gloom-and-doom inherent in double-digit profit numbers to keep him from seeing clearly. Alex Sanchez, the president of the Florida Bankers Association, blasted the credit union tax exemption in a Wall Street Journal editorial, arguing any credit union over $500 million in assets should pay corporate income taxes.

“The problem with modern American credit unions boils down to a simple question: Why should a family of four pay more income taxes than a $90 billion financial institution?” wrote Sanchez. “That’s the total amount of assets held by Navy Federal Credit Union. Yet it is exempt from federal and state corporate income taxes, as well as sales taxes…This is corporate welfare.”

Right on, Mr. Sanchez. You. Nailed. It. I think we all agree that family of four would gladly pay more in checking and card fees and in higher loan rates if it just meant credit unions could be abolished and America’s banks could finally claw their way back to their feet.

The Real Common Bond

Of course, there’s a very good chance that family of four is still doing some clawing themselves as they try to put their financial lives back together and maybe even build just a little bit of equity in their home after the Wall Street meltdown of a decade ago—it was the typical American family that got the bailouts, wasn’t it?—so they’ll understand more than anyone when someone needs a helping hand.

Valiantly, Sanchez was somehow able to focus amid the anguish over the banking industry’s P&(No)L statements to write, “Congress should keep the tax exemption for smaller credit unions that serve customers with a genuinely tight common bond…” 

By common bond, perhaps he means groups tightly bonded around a common practice, such as attempting to deflect attention somewhere else so folks don’t see what’s really happening. There seems to be a lot of that going around these days.

Frank J. Diekmann is Cooperator in Chief at and can be reached at

Section: Standard
Word Count: 1114
Copyright Holder:
Copyright Year: 2019
Is Based On: