Kayla Selhorst, SVP/Chief Operations Officer, CME Federal Credit Union
Published by the Ohio Credit Union League
Amid the recent decision by Hicksville Bank to sell to Interra Credit Union, you may have seen a series of misstatements and misdirection from the Bank Lobby surrounding credit unions and the credit union model that serves the financial needs of more than 3.3 million Ohioans.
We’re here to set the record straight as part of a four-part series: Credit Union Myth Busters. Today’s topic is the unlevel playing field for credit unions versus banks.
While banks are publicly claiming that credit unions enjoy an unfair economic advantage as not-for-profit financial institutions, the truth is that banks enjoy several economic advantages that credit unions do not.
Examples of these credit union industry disadvantages include:
- Capped Business Lending: While federal law caps credit union member business lending at 12.25% of total assets, banks face no such limit on business lending.
- Restricted Membership: While credit unions are bound by defined and often narrow fields of membership, banks are free to serve any customer and expand without these limitations.
- Limited Access to Public Deposits: Unlike banks, credit unions do not have access to public deposits, which constrains balance sheet growth and liquidity options.
- Constrained Capital Formation: Credit unions cannot issue stock and have only limited access to supplemental capital, restricting their ability to compete.
Credit unions are proud of our collective Movement and our ability to serve Ohio’s 3.3 million credit union members with flexibility and agility. And we’ll continue to do so.
However, any claims that credit unions enjoy an ‘unfair advantage’ are not only false, but also only serve to highlight the ways in which credit unions often operate at a distinct disadvantage when compared to banks and other financial institutions.
Instead of punishing credit unions, as the bankers propose, lawmakers should be rewarding credit unions for stepping up and providing community-based financial services even when banks will not.
The credit union model values ‘people over profit,’ which is why 3.3 million Ohioans choose to belong to a credit union. And while others seek to distract and divide from that mission, Ohio credit unions remain laser-focused on serving our members and the financial needs of every Ohio community.