Oct. 3, 2011


Comments

 
 
 
  • its time CUs stop living in the past.........
    Anonymous
     
     
     
  • Banks, Savings and Loans and other financial institutions do not have totaaly Volunteer Boards and share holders do not get the one member/one vote ownership credit union members have. If credit unions become taxed, banks, s&l, and other financial institutions should have the same unpaid Board and one member/one vote provisions.
    Jay Flanagan
     
     
     
  • I would also question Mark's assertion that by taxing credit unions, it would force them to alter their core missions. I'd argue that the decision to keep or abandon those core missions can only be determined by the institutions themselves. USAA, a savings bank, has built its business by following many of the same exceptional standards and values that credit unions practice. In this case, taxation is not a barrier to providing its membership with outstanding products or services.
    Jennifer Sosenko
     
     
     
  • This article was very well written, I enjoy the unbiased opinions of both Mark and Michael who clearly work in the CU field, but can still look at this objectively.

    Banks are a sinking ship, so whatever Credit Unions are doing must be right!
    Jackie S
     
     
     
  • In light of today's news that $1.5B Technology Credit Union in San Jose is seeking to convert to a mutual savings bank "in order to serve customers outside its current field of membership and enable it to more easily raise capital," I think that the issue of taxation and what credit unions are forced to give up in order to retain their non-taxed status needs to be more thoroughly discussed. No one LIKES to pay taxes, but what if, by agreeing to be taxed, the benefits of the resulting relaxed restrictions outweigh the roadblocks being experienced in today's confining operating environment?

    We need to be seeing more conversations like this one and be open to the possibility of changing the current structure to have the greater ability to provide much-needed solutions for today's consumers. Compromise can be hard, but it's a much less bitter pill to swallow if you can come out ahead in the long run. If the answer to weigh the options is just a flat-out "no," I think we'll probably be seeing many more conversions in the future.
    Jennifer Sosenko
     
     
     
  • "Credit unions relieve a burden of the public in many crucial ways with their financial services: lower fees, higher returns on savings, and more affordable loans to those who might not have access to credit." I'm not sure I am buying this, it is kind of fluffy and idealistic. As an average consumer, who happens to be a CU Member, I cannot think of any instance where I could not get a loan elsewhere, or where the benefits from the CU were better.

    Plus, anyone can join a credit union nowadays. The membership restrictions have gotten so loose, it really is not a unique service anymore.

    The argument that $3 Billion in tax revenue is irrelevant is absurd, too. That is the exact mentality that has gotten us in to the mess we are in; everything counts! Plus, if Michael is right, that lifting the tax-exempt status would lead to significant growth, than that $3 Billion would also grow tremendously.

    The banking industry as a whole is definitely in need of some reform and new regulation, no doubt about that. But that does not mean that Credit Unions should get out of paying taxes.
    jackattack
     
     
     
  • "credit unions would become liable for payment of corporate income taxes on retained earnings, but not on earnings distributed to members. That means that credit unions would have more of an incentive to return their profits to the member, resulting in likely higher dividend checks".

    What a strange way to say interest paid on savings accounts is deductible. Good strategy - pay a dollar in interest to save 25 cents on tax.

    Fred
     
     
     
  • Some CUs even have national membership through national organizations like the PTA and National Military Family Association.

    By being taxed CUs would also gain flexibility in investments and the ability to raise capital.

    Banks should be careful what they wish for.

    One argument I hate, "It is only $3B" in reference to the amount of taxes that would be raised. There are probably 1000s of similar scenarios, however, when added together the amount adds up.

    Personally, I don't believe it is a tax problem, but things are going to have give on both sides of the aisle.
    ChrisCD
     
     
     
  • USAA FSB may not be the best example. It is heavily subsidized by the association's Property & Casualty business. It is easier to maintain higher standards when the business need not be financially viable.
    Mike Jones
     
     
     
  • I agree with Mark's comments. Great article. I also feel that if credit unions are taxed that could open up the possibility for other non profit organizations to be taxed.
    skittles jones