To: Members of Congress. Re: What's Really Motivating The Bankers' Attacks

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To: Members of the House of Representatives

From: The National Association of Federal Credit Unions, Murray S. Chanow, Director of Political Affairs

Re: Banker Attacks on Credit Unions

PROFIT, PROFIT, PROFIT - Do I have your attention? This is what the banks are after.

Once again the credit unions have come under attack from the banking industry. These are the same banks that year after year make record profits-profits that come from charging excessive fees on America's consumers -and then turn around and give them to their executives and board members.

In a memo by the ABA dated March 27, 2006, the bankers state that Congress should "End the Credit Union Madness" by opposing the Credit Union Regulatory Improvements Act of 2005, H.R. 2317. I think it would be beneficial to examine the facts rather than the myths the bankers continue to spread on Capitol Hill. Here are the facts:

1. The bankers complain to Congress that credit unions are not fulfilling their mission.

2. Through regulation, credit unions begin adding underserved areas around the country, giving millions of underserved Americans the ability to join credit unions and have access to low-cost financial services. These are the same communities that have been ignored by the banks because they are not profitable, yet the ABA is suing the National Credit Union Administration (NCUA) for allowing credit unions to add these same underserved areas to their fields of membership.

The bankers claim that H.R. 2317 would dramatically increase the business-lending authority of credit unions and prevent credit unions from serving people of modest means. The truth is, banks have ignored small businesses for so long that they have lost their place in the market. In 2001, the Treasury Department released its study entitled "Credit Union Member Business Lending;" in it they found that 59% of credit union member business loans were less than $50,000, that credit unions were providing a specific niche to the marketplace, not a "threat to the viability and profitability of other insured depository institutions." We need to continue to give small businesses a choice when seeking affordable loans and not limit their ability to acquire capital.

Finally, the banks refer to the "madness" within the credit union industry. Let me explain what I think is maddening. At the same time that banks continue to make record profits and lobby for more corporate welfare, we have seen many banks converting to Subchapter S status. What does this mean? Simply put, currently there are over 2,249 Subchapter S banks, of which 1,174 pay no taxes. So at the same time the bankers are trying to tax credit unions, they continue to find ways not to pay any themselves. The bankers are continually looking for a way to keep the George Masons of the world out of the big dance. It is unfortunate that the banks cannot find a way to work with credit unions to benefit America's consumers.

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