August 25, 2023

Mesack: Americans are choosing CUs over banks for a reason

US Capitol buildingIn response to a banking trade association’s request that Congress investigate credit union growth and the industry’s tax-exempt status, NAFCU Senior Vice President of Government Affairs Greg Mesack said banks should “look in the mirror” to understand why Americans are turning to credit unions for financial services. NAFCU firmly believes that credit unions are the best option for financial services for American consumers and small businesses.

“In recent years, banks have been closing branches, turning customers away, and even repeatedly been fined billions for abusing and defrauding their customers,” 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.”

Mesack pointed to data that 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 (+2.4 percent) while banks have closed branches (-10.8 percent), and the credit union tax exemption benefits the economy by roughly $16 billion each year.

“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 highlighted. “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.”

NAFCU consistently touts the credit union difference and sets the record straight against misleading banker attacks. The association will continue to aggressively defend the industry’s tax-exempt status, pursue field of membership reforms to allow all credit unions to serve Americans who have been left behind by banks, and reduce regulatory burdens to increase Main Street’s access to credit union member business lending.