Another View -- Paul Gentile: Banks should stop attacking credit unions and focus on customers
MARK PRIMEAU trots out the New Hampshire Bankers Association’s worn out anti-credit union rhetoric once again in the opinion piece that the Union Leader published on April 28 titled “Credit unions should not receive special treatment.”
It seems that the New Hampshire Bankers Association and its member bankers are confused by the distinction between fact and opinion when it comes to credit unions. Since the bankers began their campaign against New Hampshire credit unions over two months ago they have repeated the same old inaccuracies that the banking industry has been parroting for 100 years. The problem is they are confusing fact with fiction.
Primeau begins with an old favorite, that credit unions were granted “substantial advantages” in exchange for tight membership restrictions. He writes that “In return, they were provided exemptions from taxes and later were carved out from some of the onerous regulations that banks are required to follow.” This blatant falsehood has been repeated so often by bankers that they actually seem to believe it. The simple truth is that credit unions never bargained for tax exemption. It was granted as a matter of law when the first credit unions formed as not-for-profit member-owned cooperatives.
Then he rolls out the whopper, writing that credit unions have less of a presence in low-income communities than banks. The study the NH Bankers bought uses selective and misleading data to reach the conclusion the bankers wanted rather than an accurate picture of credit union presence in low-income communities. Their study relies on county data, which is tremendously flawed due to the fact that counties have both high-income and low-income areas. Census tracts designated by the federal government to be low-income are called Community Development Financial Institution (CDFI) Investment Areas and provide a far more accurate picture.
New Hampshire Credit Unions have 41 CU branches in CDFI low-income investment area census tracts out of a total of 116 CU branches. Banks operating in New Hampshire have 119 bank branches in CDFI low-income investment area census tracts out of 432 bank branches in the state. In other words, for CUs and banks operating in New Hampshire, 35.3 percent of CU branches are in CDFI low-income areas but only 27.5 percent of bank branches are in such areas.
Even excluding the international and national banks (TD Bank North, RBS Citizens, Santander and Bank of America) that control 60 percent of the deposits in New Hampshire, the story is the same. For CUs and banks headquartered in New Hampshire, 36.1 percent of CU branches are in CDFI low-income areas but only 23.3 percent of bank branches are.
He then suggests that credit unions are “wards of the state.” A review of recent history shows that the money the banking industry cost the taxpayers of the United States due to the recent banking crisis, through TARP and other taxpayer funded programs, cost consumers hundreds of times more money than credit union taxation would ever yield. And that tax exemption produced benefits for working families through better rates on loans and deposits and low account fees. What did the citizens of our nation get from the banks for bailing them out? Not so much as a thank you.
Primeau points out that the state’s credit unions have a growing percentage of the state’s deposits (he indicates that it is 18 percent; the actual figure is 14 percent). He notes that community banks are down to 27 percent. That leaves roughly 60 percent of the deposits in the control of the international and national banking giants. These big banks are gaining share through sophisticated marketing and the purchase of smaller community banks. Even some more modestly sized, out-of-state banks are in the game. Recently, Massachusetts-based Eastern Bank announced it was buying the $850 million Centrix Bank. So next year will show an even smaller market share for New Hampshire community banks. If anything, an analysis of the deposit market share makes a powerful case for a robust credit union alternative.
Once again, I’ll point out that the credit unions of New Hampshire are busy providing excellent service and financial products for consumers. I urge the state’s bankers to stop attacking credit unions and focus on taking care of business.
Paul Gentile is president and CEO of the New Hampshire Credit Union League.