Iowa League Editorial Sets Record Straight on Bankers' Comments

WEST DES MOINES, Iowa – The September 27th issue of the Des Moines Business Record featured an editorial rebuttal from the Iowa Credit Union League to an article that ran in an earlier addition of the weekly newspaper which the League said included several misleading statements about Iowa CUs. In anticipation of the Iowa Bankers Association holding their annual convention Sept. 18-21 and expecting the bankers association to announce credit union taxation as one of their legislative priorities, the Iowa Credit Union League took steps to minimize any negative press the bankers could promote about credit unions by contacting state media to assure them the League would be available to comment or offer rebuttal on any negative credit union articles from the IBA convention. While the League successfully negated almost all IBA convention coverage, the article in the Sept. 20 issue of the Des Moines Business Record entitled “Bankers target legislative issues during convention” slipped through. When explaining in the article that one area of focus of the convention would be on “how large credit unions have gained expanded powers, serving the same populations as banks, without being subject to the same regulations, taxes, and community reinvestment rules” as banks, IBA President John Sorensen stated that, “Some of the larger credit unions have abused the charter that they were originally designed for.” He cited John Deere Community CU as serving approximately 30 counties in Iowa, “yet at the same time pays no federal and state income tax to pay for our infrastructure, to support our schools and to provide a whole host of services that are now funded through tax-payer dollars. We see this as unfair to the communities and to the rest of the commercial banking industry.” In his rebuttal article – “Be fair to credit unions” – that ran in the following week’s issue of the Des Moines Business Record, Iowa Credit Union League Director of Strategic Alliances Murray Williams wrote that “while this attack is nothing new, credit unions don’t want inaccurate quotes from bankers to cloud the truth about our state’s financial industry.” Among the “truths” Williams set straight in their article were that: * while CUs are taxed differently because of their not-for-profit structure, Iowa CUs do pay taxes such as sales, property, and employer-related taxes; * Iowa CUs are locally owned and reinvest in their communities. CU board members volunteer in their local communities, and CUs also reinvest in Iowa by lending a higher portion of their deposits than banks do; * Iowa CUs serve the underserved. Federal Home Mortgage Disclosure Act statistics show that Iowa credit unions are nearly twice as non-credit union institutions to approve low-income Iowans for a mortgage loan; * Iowa CUs provide consumers with better rates. Datatrac, an independent rate comparison firm, recently showed that the average Iowa credit union provides higher interest rates on deposits than banks, while offering lower average loan rates; * Iowa CUs haven’t hurt bank profits. A December 2003 study by retired Iowa State University economist Ken Stone showed that Iowa banks increased their net income by 79.1% from 1990-2002, with a 21.2% increase just in 2002. “Credit unions provide a check-and-balance to the for-profit banking industry and provide Iowa consumers with a financial choice. Nearly one million Iowa credit union members already understand these truths. I wonder why it’s so hard for bankers to grasp,” Williams concluded. -