Two Michigan Editorials Support CU Expansion

DETROIT and LANSING, Mich.-Two recent editorials in Michigan papers have backed credit unions in their fight to be able to expand their services. State Senator Shirley Johnson (R-Royal Oak) has introduced legislation (Senate Bill 496) to modernize the state’s credit union law after 20 years, The Detroit News editorial noted. It highlights banker complaints that credit unions should not be able to expand because they are not paying taxes. “But the fact is,” it read, “credit unions don’t pay state and federal income taxes because they are nonprofits, not because of the size of their customer base. Banks make profits, which are distributed to shareholders. Credit unions can’t.” The editorial also pointed out, “Credit unions have a choice to be chartered by the state or federal governments. About two-thirds of Michigan’s 450 or so credit unions are chartered by the state, not the feds. If the state does decide to apply the state Single Business Tax to Michigan credit unions in exchange for modernizing the credit union code, they will simply switch to federal charters. They would still be exempt from federal income taxes.” This could cost the state up to $10 million. Another editorial by Gary Gosselin of The Daily Oakland Press called the Michigan credit union modernization legislation “only fair.” This editorial also noted credit unions not-for-profit difference. “It’s a matter of parity, say the banks, a level playing field, say the banks, a competition of equals, say the banks. Phooey,” it read. Gosselin said that credit unions only represent 2% of the financial services industry nationally and, in Michigan banks have 85.4% of the bank/credit union sector. He added, “In Michigan, all credit unions combined have $26 billion in assets. Comerica, Standard Federal and Fifth-Third Bank EACH have that much in assets.”