Credit unions focus on need, not profit

As part of a community financial institution that has been committed to Roosevelt and Curry counties for 63 years, I was shocked to read that a local banker is attacking credit unions in The Eastern New Mexico News. (Kent Carruthers’ guest column published Nov. 17)

Credit unions and local community banks have both for years worked to grow our communities, and by parroting the big-bank talking points he’s doing this community a disservice.

Our credit union has been serving the residents of Portales since 1957, helping people grow their personal wealth through membership in a credit union that they own. Member-owned financial cooperatives — credit unions — provide financial services focused on the needs of members and their communities, rather than maximizing profits for out-of-state investors and lining the pockets of Wall Street executives. Credit unions are there for members of modest means, and it shows in the numbers.

While the size of the credit union movement sounds impressive, with over 115 million members nationwide, credit unions only hold 6% of all financial assets in America — banks hold the other 94%. Nonetheless, credit unions provide $12 billion in financial benefits to their members annually.

Big banks have wanted to abolish the not-for-profit status of credit unions for years for simple reasons: they don’t believe in lower loan rates, sharing profits, or helping people rise up out of poverty. Credit unions are non-profits, in large part so that we can share the money we earn with all of our member-owners.

Credit unions originated to serve members that banks would not, and today credit unions make the loans that banks will not. Nearly 50% of all credit unions have a specific focus on families of modest means. While few banks will make short-term small-dollar payday loans, payday loan companies will, and will typically have APRs that are 15-20 times higher than those same types of loans at a credit union.

Credit unions are taxed differently because we are different.

The irony is that the attack, saying a not-for-profit should be taxed, is from a banker whose company has an IRS Subchapter S status, meaning his company also doesn’t pay any federal corporate income taxes. It passes them on to shareholders — who share in the benefits of deductions and losses that credit union member-owners don’t get to share in.

That said, community banks and credit unions share many core values. We both want to be part of a community, support that community, and lift it up. We just have different ideas on what that means. We help everyone share in the pie, not just a handful of owners.

Ron Moorehead is president and chief executive officer of First Financial Credit Union. Contact him at:

[email protected]