Letter to the Editor: U.S. Congress Needs to Stop Corporate Welfare and Have Credit Unions Pay Their Fair Share
The average Louisiana family pays $2,719 in federal income taxes. Federal taxes paid by credit unions: $0.
It’s time for the U.S. Congress to stop this corporate welfare and have credit unions pay their fair share. Barksdale Federal Credit Union in northeast Louisiana is about $1.3 billion in assets and larger than 93% of Louisiana banks. An example of how credit unions have strayed far from their original mandate to help those of ‘small means’, is Jefferson Financial in Metairie. Last year Jefferson Financial led a group of credit unions that provided a $112 million syndicated loan to an Irvine, California-based biofuels company. At $890 million in assets, they earned $8.6 million in 2017. Would it really harm them if they paid 20% of that income to the federal government like banks do to support our military and other vital services? Navy Federal Credit Union is a $90 billion dollar institution, yet pays no federal corporate income tax. When I served in the military, I was a member of Navy Federal and it’s a fine organization. But the federal tax exemption is not appropriate for this behemoth and the corporate welfare should end. Today more than 300 credit unions nationally have more than $1 billion in assets, are tax exempt and yet compete in the market with tax-paying banks.
Take Golden 1 Credit Union, with $11 billion in assets, that paid $120 million for the naming rights to the new Sacramento Kings arena. Or CFE Federal Credit Union, with $1.7 billion in assets, that paid $4 million to put its name on the basketball arena at the University of Central Florida. Or Public Service Credit Union with $2.3 billion assets that paid $37.7 million in naming rights for the Colorado State University stadium. And it goes on and on. What about the compensation of credit unions chief executive officers? The CEO’s of state chartered credit unions with at least $1 billion in assets had an average total compensation in 2014 of over $1 million dollars. The highest paid CEO was Olan Jones of Eastman Credit Union in Kingsport, Tennessee at almost $9.3 million. We know this because state chartered credit unions are required to file IRS Form 990. Federally chartered credit unions are exempt from this disclosure.
Today credit unions have more than $1.1 trillion dollars in deposits, are major lenders in auto and home mortgages and are increasingly moving more and more into commercial and small business lending. According to Home Mortgage Disclosure Act data collected by the federal government, only 4% of Louisiana mortgages originated by credit unions went to low-income borrowers, compared to 85% of mortgages that went to middle and upper income borrowers. According to this same data, 61 credit unions serving Louisiana did not make a single loan to low income individual. So much for serving those with ‘small means’.
Banks, as the competitors in the market that pay taxes, have a right to speak up about the government’s favoritism of granting credit unions tax-favored status. If credit unions paid taxes, then the litany of concerns listed here would not matter. Banks would be competing on a level playing field, something they would welcome. It makes no sense for our government to favor one group over another that compete with each other. Credit unions pay taxes in other countries, like Canada, Australia, Ukraine, Lithuania, Latvia, Poland and Netherlands. This is not 1934 when the country was in the depths of the depression and Pres. Franklin Roosevelt signed the Federal Credit Union Act into law. This is 2018 and credit unions will be just fine paying taxes like every other business and citizen in our country.
Robert T. Taylor
Chief Executive Officer
Louisiana Bankers Association