Examples of big banks breaking consumer trust have dominated headlines for more than a decade, from subprime lending to fake accounts. Amid banks’ public apologies, Iowa credit unions have had no such behavior to apologize for. In fact, credit unions have been a needed alternative in the marketplace for Iowans looking for a not-for-profit financial cooperative to help improve their financial lives.
While Iowa banks are on track for another year of record profits, outpacing their national counterparts, Iowa’s large credit unions like Veridian have been the target of their efforts to minimize competition and raise taxes on credit union members. Of course, size is relative. Wells Fargo alone is bigger than the entire credit union industry in the United States combined. In fact, the “too big to fail” banks have only gotten bigger since the housing crisis 10 years ago, and bank profits are at an all-time high.
While community banks and credit unions try to keep up with the regulatory burden caused by big banks’ transgressions, the Iowa Bankers Association is trying to inaccurately blame credit unions for the consolidation of rural Iowa banks. The challenge for community banks is the large banks in Iowa, the top seven of which control 25 percent of the state’s deposits.
Competition from credit unions is clearly not hurting banks, but it does benefit Iowa consumers. Iowa’s credit unions are serving Iowans, proving worthy of their trust and providing needed competition that incentivizes banks to do the same.
Last year, Veridian members saved more than $22 million by using loan and deposit products at their cooperative rather than a for-profit bank. That’s not only good for our members, it’s good for our local economies. It also incentivizes for-profit banks to keep their rates and fees competitive, which is good for all Iowans.
As the 2019 legislative session begins, we hope to work with legislators on initiatives that help Iowans live their best financial lives. Credit unions pay millions in taxes each year, including property tax, sales tax, employer-related taxes and a state tax on legal reserves. As member-owned, not-for-profit financial cooperatives, credit unions are different than banks. And while banks are apologizing, we’re proud of the credit union difference and the difference it makes for Iowa consumers.