Visit the Adobe Flash Player Download Center at
http://www.macromedia.com/go/getflashplayer



Do large credit unions deserve their tax exemption?


In 2007, the Wisconsin Bankers Association released a study that examined the lending and expansion trends for the largest credit unions in Wisconsin. The findings clearly show a pattern away from serving low- and moderate-income populations in favor of focusing on higher income customers.

The analysis demonstrates that a significant level of large Wisconsin credit union home lending activity flows to higher income households. To the extent that credit unions use their tax exemption to lower home lending rates, federal and state income tax exemptions are subsidizing borrowing by high-income households. 

The WBA study comes on the heels of similar studies conducted by the National Community Reinvestment Coalition (NCRC) in 2005 and the Government Accountability Office (GAO) in 2006. Both studies concluded that credit unions lag behind banks in serving low- and moderate-income populations and raise questions about what taxpayers receive in exchange for the credit union industry’s multi-billion dollar tax subsidy.

Over the next 10 years, the credit unions’ tax subsidy will approach $400 million in Wisconsin and $31 billion nationally. Can Wisconsin afford tax exemptions that may no longer be warranted from a public policy perspective?
  
Facts about large profit driven Wisconsin credit unions
  • Half of all credit union customers are considered upper income (GAO).
  • Credit unions lag banks in serving low- and moderate-income customers (GAO and NCRC). 
  • Credit union customers have a higher median income than bank customers (GAO). 
  • Credit union customers are better educated and are more likely to be home owners than bank customers (GAO).
  • The number of upper income credit union customers has increased since 2001, while the number of low- and moderate-income customers declined (GAO). 
  • During that same period, the number of low- and moderate-income bank customers increased (GAO).
  • Of Wisconsin’s largest 17 credit unions, 15 made at least 32 percent of their total mortgages to upper income borrowers in 2005 (WBA).
  • The credit union tax exemption will cost taxpayers $31.3 billion over the ten year period between 2004 and 2013 (Tax Foundation).
  
   Copyright © 2010 by Wisconsin Bankers Association   Terms Of Use  Privacy Statement