Banking industry lobbyists have become increasingly vocal in their attacks on credit unions. Banks have been demanding a repeal of the credit unions tax status, railing against credit unions for filling a void in the market for member business lending, and opposing regulatory reform measures that would grant qualified credit unions access to supplemental capital and improve the safety and soundness of the credit union system.
Credit unions need to set the record straight.
The banking industry is unhappy because consumers and small businesses are increasingly choosing credit unions as a source of affordable credit and affordable retail banking services.
Today, more than 90 million Americans look to credit unions as their preferred source of consumer financial services and private sector lending. As a testament to the value credit unions provide, hundreds of thousands of consumers have transferred their bank accounts to credit unions over the past several years.
Credit unions have earned the trust and confidence of their members by prioritizing service and value in good times and bad. When consumers, homebuyers and small businesses were having trouble accessing credit during the recent recession, many looked to credit unions to meet their needs ó and credit unions answered. Credit unions increased first-time mortgage lending in 2009, up by more than 35 percent to $95 billion. At the same time, other lenders posted the largest declines in more than 70 years.
Whatís the key to credit unionsí success? The same as it ever was.
As not-for-profit financial cooperatives, credit unions exist to serve their members. This means higher rates of return on checking and savings accounts, low interest rates on loans, fewer fees and a fundamental commitment to member service. Credit unions are financial institutions run for and by their members. Because of their cooperative status, credit unions can concentrate on returning value to their members, rather than shareholders.
Credit unions play a key role in supporting the economic recovery and facilitating job growth in their communities, but they could be doing even more. Congress must remove the red tape under current law that makes it more difficult for credit unions to help.
For example, current credit union capital requirements limit the ability of credit unions to act as a safe harbor for deposits and to serve as an important source of private capital for lending. Current law restricts the ability of credit unions to build capital. Credit unions are the only financial institutions in the U.S. that do not have access to capital beyond retained earnings.
HR 719, the Capital Access for Small Businesses and Jobs Act, is simple, much-needed relief legislation that would address this issue by allowing well-managed credit unions to accept supplemental capital. This bipartisan bill was introduced by Reps. Peter T. King and Brad Sherman, from our home states of New York and California, respectively.
Access to supplemental capital would allow credit unions to meet their membersí needs, to increase services, provide more attractive rates and increase private credit in the market at a time when itís needed most.
Supplemental capital is a tool that would help credit unions, large and small, continue to provide their members with access to affordable financial services. Importantly, the legislation ensures that credit unions could only access supplemental capital that preserves their unique status as not-for-profit financial cooperatives.
Vice President Joe Biden waits to conduct a mock swearing-in ceremony with Sen. Brian Schatz, D-Hawaii, in the Capitol's Old Senate Chamber, December 2, 2014. Schatz was sworn in to serve the remainder of his term since he was appointed to the seat after Sen. Daniel Inouye, D-Hawaii, passed away.