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  • 2 Sep 2014

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Credit unions value people over profits

Two Views: Different financial institutions, different rules


When banking industry excesses plunged America into the first Great Depression in the 1930s, President Franklin D. Roosevelt signed the Credit Union Act of 1934. It enabled consumers to form not-for-profit, cooperative financial institutions of their own to focus on the needs of their families, not the needs of bank stockholders.

Today, 1.4 million Oregonians find that option as viable as it was then. The reason is that these member-driven, local cooperatives provide their members with real, tangible benefits. Oregon’s credit unions saved their members $121 million last year, in the form of lower fees and better interest rates.

Members also value the community-focused DNA of credit unions. Every day Oregon’s credit unions are serving their communities. They are doing many great things, such as raising more than $12 million for the Doernbecher Children’s Hospital since 1986, volunteering at local food banks, teaching financial education in schools, and donating materials and labor to build homes for disabled returning war veterans.

Bankers bristle at the realization that a not-for-profit financial alternative remains an important buffer for consumers to the high fees, higher loan rates and lower return on savings that are cornerstones of the banking industry’s for-profit model.

Unfortunately, while credit unions continue to focus on serving their communities, the Oregon Bankers Association has joined their national Wall Street counterparts in trying to stifle credit unions. This is particularly difficult to understand, considering that banks control more than 90 percent of all assets in this country.

The bank lobby is the man-behind-the-curtain introducing legislation to impose additional taxes and regulatory burdens on credit unions. They want to saddle credit unions with regulatory burdens such as paperwork itemizing the very civic and community investments that have benefited credit union members for decades.

Thus, it is not surprising that a poll, conducted by Voter/Consumer Research in January of this year, found 90 percent of Oregonians had a favorable view of credit unions while banks had only a 53 percent favorable rating. Add your thoughts at: www.saynotobigbanks.com.

Banks continue to argue that credit unions are getting “too big” and are not “mom and pop” institutions anymore. But it is the structure, not the size of credit unions, that makes them different. Profit-hungry banks are structured to generate payments to stockholders. Not-for-profit credit unions exist for one purpose: to provide value to their members.

The Voter/Consumer Research poll found 77 percent of Oregonians think credit union growth would make better loan rates and lower fees available to even more consumers and businesses.

The poll also found that 82 percent of Oregonians believed that credit unions, regardless of size, should not be taxed more than they already are, because their cooperative structure allows them to return tangible benefits to members.

Today’s consumers demand more of their financial institution than just a checking account, thus requiring top-quality talent to lead institutions in today’s complex regulatory environment.

Bank executives receive compensation in the form of what many consumers define as excessive salaries and stock options in their “for-profit” bank. To add insult to the consumer pocketbook, many receive lofty bonuses despite using taxpayer dollars to bail them out. Outrageous.

Recall that credit unions do not have stockholders — therefore, there are no stock options to pay. Executive compensation for credit unions resides in competitive salaries to ensure one thing: The executives maintain their cooperatives so that more consumers can benefit in the years to come. Period.

And, speaking of those bailouts, banks were more than happy to take billions in taxpayer-funded bailouts when their reckless actions plunged our country into another Great Recession just five years ago. Oregon credit unions don’t need any handouts — and certainly should not be handcuffed by the banks’ political posturing once again.

I have a bold invitation for the bank lobby more focused on crippling credit unions than on improving their own efficiencies and services: convert to a credit union charter. Why not give up your stock options and give back to consumers?

Troy Stang is president and chief executive officer of the Northwest Credit Union Association, Beaverton.