Credit union myth v. fact

Scott Simpson

America's Credit Unions President/CEO Scott Simpson sent the following correspondence to Congressional offices to dispel the continued misinformation from the banking sector to set the record straight -- sharing how cooperative finance makes a difference for millions of people and communities...

The Independent Community Bankers of America (ICBA) is once again trotting out the same old tired arguments when publicly attacking credit unions. When you look closely, the facts show that these attacks—as usual—miss the mark.
 
Here are a few big misses in their recent op-ed that we wanted to highlight:
 
MYTH: “Across the country, credit unions are using their federal tax exemption to acquire local community banks…”
 
FACT: Across the country, credit unions are using their federal tax exemption to provide lower cost loans, higher savings rates, and financial counseling services for consumers trying to make ends meet. At a time when affordability is top of mind for working Americans across the country, the data clearly shows that with every type of loan—from auto to credit cards and mortgages—credit unions are making life more affordable for those who need it most.
 
MYTH: “In markets where community banks participated in SBA programs, those loans declined after a credit union acquisition nearly 80 percent of the time.”
 
FACT: The claim that credit unions lend less to small businesses relies on a selective and misleading use of Small Business Administration (SBA) data. A more honest reading of the same dataset—SBA 7(a) loan activity from 2010 to 2023—reveals that the banks choosing to sell to credit unions barely participated in SBA lending to begin with. After acquisition, those same branches increased their small business lending under credit union stewardship. The numbers are not ambiguous. The rhetoric is.
 
MYTH: “…lawmakers should treat credit unions over $1 billion in assets the way they operate — like tax-paying commercial banks.”
 
FACT: Credit unions’ tax status is due to their not-for-profit cooperative structure, where their members are the owners. Credit unions succeed when their members succeed. No matter the size, it’s their structure and focus on the member that is the determining factor to being a credit union. Whether they have $50 million or $10 billion in assets, that structure remains the same. The data has proven this for the better part of a century. Credit unions, large and small, offer better prices and services because they aren’t focused on making money off their members. The profits go back to members.
 
MYTH: “Consumers hear the jingles marketing ‘great rates for everyone’” is bad?
 
FACT: It’s not bad for consumers. Bankers hate the competition, and they would like Congress to eliminate credit unions so they can charge more. Independent research reinforces this reality. A study from American University shows that the mere presence of credit unions in a local market drives down costs and improves products for consumers across the board. Competition works. In fact, Americans benefit by roughly $23 billion each year due to the competitive pressure credit unions place on banks. If that is the ICBA’s definition of a market distortion, most consumers would welcome more of it.
 
Consumers deserve to know if they are eligible to join a credit union and access affordable rates. Everyone benefits from the presence of credit unions, even if they don’t use one.

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