FEDERAL WAY, Wash. — A new economic analysis being released today says the data shows "no evidence that state and federal tax policies give credit unions unfair competitive advantages over banks."
The report, "Credit Unions vs. Banks: The Myth of the Uneven Playing Field," was commissioned by the Northwest Credit Union Association and authored by ECONorthwest economists Dr. Randall Pozdena and Dr. Michael Wilkerson. It follows an effort during the Spring by the Oregon Bankers Association and the American Bankers Association to lobby the Oregon legislature and Congress, respectively, to revoke the credit union tax exemption."
The authors say their analysis determined that "credit unions' tax structure has not positioned them to take market share from banks, that credit unions still serve a large share of consumers with modest means, and that credit unions do not unfairly benefit from not-for-profit tax status, all contrary to bank lobby claims."
Pozdena and Wilkerson evaluated national commercial bank and credit union data from 1948 through 2012, and Oregon and Washington data from 1995 through last year. Among their conclusions:
- Credit unions' cooperative management model allows them to provide superior deposit and loan rates and greater protection from risk relative to investor-owned banks.
- Trend analysis shows commercial banks continue to dominate the financial services market in deposit and asset shares; credit unions' tax structure has not positioned them to harm banks' market share.
- Consolidation of smaller credit unions has been a response to the risk and operational inefficiencies of small scale and was not driven by tax policy.
- Credit unions are continuing to serve Americans with modest savings, with the share of small accounts under $1,000 declining much more slowly than at commercial banks. Conversely, commercial banks' share of accounts over $100,000 is 240% higher than credit unions' share.
- Credit union staff is paid less in salary and bonuses per employee than commercial banks, consistent with cooperatives' focus on maximizing member benefits.
