Federal and state leaders are considering comprehensive tax reform, and once again the bankers are trying to use it as an opportunity to eliminate competition in Iowa’s financial marketplace.
Banks claim there is an unlevel playing field due to a difference in taxation, but are reluctant to tell the full story. Unlike for-profit banks, credit unions are not-for-profit financial cooperatives that are owned and governed by their members.
As the CEO of the University of Iowa Community Credit Union (UICCU), that means I have 165,000 member-owners as my boss and, let me tell you, that’s a great thing. The credit union is run by — and for — consumers, and not to profit Wall Street or a select group of shareholders. Large credit unions have proved they use their growth to reinvest in Iowans and help improve their financial lives, showcasing the fact that we put people before profits. Recent bank scandals like the one surrounding Wells Fargo prove banks often have other motives.
Our credit union in particular seems to be the center of the bankers’ bull’s-eye. They claim that a credit union can “outgrow” its mission. Iowans have long since known better, and we have data to show that’s simply not true. For the last 20 quarters, UICCU has frequently been ranked either first or second in the nation (out of roughly 6,000 credit unions) for returning earnings back to members in the form of better rates on loans and deposits. In the past year alone, UICCU’s not-for-profit structure has saved members $58 million. Looking for a real-life example? Last year alone we originated 5,500 mortgages without charging the typical one percent origination fee, saving Iowans more than $10 million.
In 2016, we had more loan losses than any financial institution in Iowa — more than twice that of the closest bank. Why is that a good thing? Because it means we continue to take chances on people who need help the most. Our growth and size is a good thing for Iowans because it allows us to take more chances on people than banks are willing to take, which helps more Iowans realize their dreams of homeownership, starting a small business and more.
Credit unions like ours are also deeply committed to the communities in which their members live and work. This year, our staff will volunteer more than 4,000 hours and our credit union will contribute more than $1.3 million to support local charity and events. Quite simply, as we grow so does our support.
In addition to my 165,000 bosses, there are more than 1.1 million credit union members in Iowa that save more than $100 million each and every year in better rates and fewer fees compared to what they would have paid for at a bank. These savings are a direct result of our not-for-profit structure, and would go away if credit unions were taxed the same as for-profit banks. Simply put, an increase in taxes on credit unions is an increase in taxes on 1.1 million voting Iowans.
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One final point: If the credit union structure is so advantageous, it’s worth noting that the banks themselves could easily change their organization’s business model. Yet banks still control over 85 percent of the assets in Iowa and 95 percent of the commercial loans. If Iowa banks were structured like credit unions, the $4.3 billion banks paid in stockholder dividends over the past decade would have been paid to their customers instead.
Credit unions support tax reform that provides true relief to Iowans and helps our credit union members keep more of their hard-earned money. Increasing taxes on credit unions does the exact opposite. We urge our elected leaders to protect financial choice for consumers and say no to bank efforts to raise taxes on 1.1 million Iowans.
• Jeff Disterhoft is president and CEO of the University of Iowa Community Credit Union.