PORTLAND, Ore.-Marvin Umholtz is dismissing critics of a study he conducted earlier this year that found the credit union tax exemption is no longer needed. Umholtz said criticism that his work lacked any "statistical analysis" was off-base.
Meanwhile, Umholtz described a new CU-sponsored study that concludes the tax exemption is not the advantage banks make it out to be as "unconvincing and confusing."
One portion of a recent study by ECONorthwest directly responds to a report released earlier this year by Umholtz titled, "Oregon's Credit Unions: Growing, Consolidating, and Often Indistinguishable from Commercial Banks." The Umholtz work argues, as the title implies, that CUs operate as banks and should be taxed (CU Journal, Jan. 21).
Questioning The Data
The ECONorthwest study (CU Journal, Jan. 17) dismisses Umholtz's claims of providing a "data-driven overview" of the taxation argument with the retort, "but the report does not conduct statistical analysis of any sort, nor does it compare any of the credit union data to commercial bank data to establish a basis for comparison."
The ECONorthwest, which was paid for by the Northwest Credit Union Association, study goes on to quote the Umholtz report, which was paid for by the banking industry, advancing the argument that the tax-exempt status of credit unions is a "competitive advantage" that "allows credit unions to unfairly increase market share at the expense of commercial banks."
However, responds the ECONorthwest study, in the Umholtz report, "No studies of market share are presented, merely the growth of credit union assets over time."
Umholtz, president and CEO of Umholtz Strategic Planning & Consulting Services, Olympia, Wash., told Credit Union Journal the NWCUA and the study's authors "certainly have a right" to present their own "narrative" about credit unions, but he insisted they "mischaracterized" the report Umholtz developed for the Oregon Bankers Association.
"My report was primarily filled with charts, graphs, and tables using NCUA information," he said, adding, "It was indeed 'data-driven.' The criticism that it did not do statistical comparatives with bank data is accurate, but irrelevant. That was not its intent."
According to Umholtz, his report was a "numbers-driven snapshot" of Oregon's credit unions and not an argument in favor of taxing them. He said the only reason credit unions are not currently taxed is because there is little legislative support in Congress and most statehouses to do so.
"All public policy is a simple matter of garnering sufficient votes and neither of these studies were likely powerful enough to significantly change that dynamic," he said. "Since the NWCUA and their report's authors appear to want a spitting contest with me, let me go on the record by saying I found their report to be a tedious read."
CUs Need a 'Plan B'
The ECONorthwest report was "nothing like mine," Umholtz continued, stating, "The two reports are not even the same genus let alone species."
"I am a fan of credit union industry history, but the pontificating about the 19th century and cooperative theory was a yawner," Umholtz said. "The academic jargon and the results from their economic analysis were unconvincing and confusing. If the NWCUA is betting its lobbying strategy on this report's political impact on elected officials, I hope that they have a Plan B."
