Credit Unions and Banks: What’s in a Name?

It seems like a constant hypocritical refrain from credit unions as they seek to move beyond their mission and purpose: We cannot pay federal taxes because we are not banks … And yet, we demand to be allowed to be banks in everything but name when it comes to business lending and beyond.

Case in point: In Virginia Living, the local lifestyle magazine for the Roanoke, Va. region, the annual “best of” competition featured advertisements for two credit unions touting their selection as two of the area’s leading … banks.

Member One – which controls over $1 billion in assets – won both “Silver Overall” and “Bronze Overall” awards.

Freedom First – with over $500 million in assets – managed a real trick: A gold in best overall credit union AND a silver in best all-around bank!

We wouldn’t have been surprised to see B&D Comic Shop win for best sushi restaurant and Texas Tavern get the gold for best dental services.

We joke, but these are differences with distinctions. Credit unions are not banks. They do not pay federal income taxes. They are not subject to the same regulatory scrutiny, and they do not have to comply with the Community Reinvestment Act.  Most recently, many did not show up when their members needed them most with the Paycheck Protection Program (PPP).

Of course, we understand how the people of Southwest Virginia could be confused given how both credit unions market themselves essentially as banks. That seems to be their new industry standard: convincing everyone they’re banks, but then glossing over those pesky issues when it comes to paying their fair share in taxes and reporting on community reinvestment.

So, what’s in a name? With respect to the Bard of Avon, in this case it’s no rose. In fact, it just stinks.

See the impact on taxes in your state.

Tell Congress: It’s time to reform credit unions.