In what has become as predictable as the swallows returning to Capistrano, the banks are in the legislatures complaining about how unfair it is that credit unions are tax exempt and this causes there to not be a level playing field (although it is a fact that the overwhelming number of real playing fields are not level). Please note that the banks that are “too big to fail” (but almost did) really don’t consider credit unions to be competition.
Here in Oregon they have introduced three bills in the House to try and “make it more equitable” for the banks. They continue to overlook an easy solution to their dilemma – convert to a credit union and they would have all of the same “advantages.” This will not happen for the following reasons.
Stock Options – Executive Management and the Directors (and in some cases lower level staff) would lose the access to all those stock options. Granted those options haven’t been as appealing the past few years, but most banks are making strong comebacks with their stock values increasing or at least stabilizing. Then there are the dividend payments that only go to the stockholders and not the customers.
Director/Committee Pay – Directors and Committee members would lose the payments they receive to be Chairpersons of Committees, Board Officers/Members and to attend meetings. Over the course of a year is this not an amount that most normal people would pass up.
Control – The institution is managed for the benefit of the shareholders and not necessarily the customers. A small group of shareholders can control director elections and the direction of the bank. A credit union must be managed for the benefit of all of its users (members) – each member has only one vote.
Regulatory Constraints – As much as banks complain, they would not like operating under the regulatory constraints of credit unions (business lending for starters). They most often harp that they have to operate under the constraints of CRA (which is in fact easily complied with under the current rules) which was forced on them due to redlining of certain sections of communities. Not all credit unions are community credit unions and those that are community have demonstrated that they are serving the needs of their members without needing CRA.
What other reasons can you think of?