CU Groups Quick To Point To Soaring Bank Profits
Credit union trade groups wasted little time responding last week to FDIC data showing a third consecutive quarter of record bank profits.
The FDIC said banks earned $30.4 billion during the third quarter of 2003. The quarterly profits alone are 50% larger than the largest natural-person credit union, Navy Federal.
"Given how bank stockholders have pocketed record profits in five of the last six quarters, their anti-credit union rhetoric has no connection with what's really happening in the marketplace," said CUNA VP-Governmental Affairs John McKechnie. "Competitive threat? I think the bankers are just making this stuff up!"
The FDIC attributed the strong earnings to a decrease in expenses for bad loans and a rise in noninterest income. Overall industry earnings were 0.5% ($147 million ) higher than the second quarter and 11.3% higher than the third quarter of last year. Banks did see a decline in net interest margin, which fell to a 12-year low of 3.65%.
The FDIC's chief economist, Richard Brown, issued an analsysis stating, "While these headwinds are slowing the growth of earnings, they are not yet strong enough to offset the factors that are boosting bank profits."
The California league said the figures "reveal the hypocrisy of repeated banker attempts to tax credit unions "It's surely good news that the nation's banks are prospering, but we do wonder why, with banks posting ever-increasing record earnings even during sluggish economic times, bankers continue to claim that credit unions represent unfair competition, and seek to tax credit unions in order to 'level the playing field,' " said Matthew Davidson, League executive vice president and chief operating officer.
Davidson also criticized ongoing efforts by banks to tax credit unions, while at the same time reduce their own tax burden.