Two credit union representatives here squared off with their banking industry counterparts in a debate sponsored by the local Business Journal.
Minnesota Credit Union Network President and CEO Kevin Chandler and City & County Credit Union (St. Paul) President Patrick Pierce argued the credit union position, while banks were represented by Minnesota Bankers Association Executive Vice President and CEO Joe Witt and University Bank (St. Paul) President David Reiling.
According to the MCUN, questions flew on a variety of subjects, including the Community Reinvestment Act, market share, tax-exemption, small business lending and the credit union difference. The text of the debate was published in the Business Journal.
Witt kicked off the debate with a charge the banking industry commonly makes, stating that credit unions have deviated from their original purpose of serving people of "what they call 'small means'....They've basically become tax-exempt banks."
"There is nothing anywhere in the Credit Union Act of 1934 that says credit unions shall be small," Chandler responded.
Midway through the debate, the conversation undoubtedly turned to taxation and the "unfair advantage" that credit unions have through their corporate income tax exemption. Reiling argued that although credit unions have only 8% of the assets in Minnesota, their "rate of growth" makes them a threat, adding that a bank pays "40% to 46% in taxes, federal and state, on its earnings."
The MCUN said that Reiling "neglected" to mention his bank's sub-chapter "S" status (meaning they pay no corporate income tax). "You would pay zero in corporate income tax," Chandler asked, to which Reiling answered, "Right."
Chandler said that taking part in the debate was a good opportunity to get an "initial taste" of some of the strategies that the bankers would throw at credit unions if and when a taxation battle takes place.
"Credit unions in Minnesota and across the nation need to open their eyes to the fact that bankers are painting bull's eyes on the foreheads of credit unions," Chandler said. "This demonstrates, once again, that we must remain ever vigilant in this increasingly hostile environment."
