Challenges strengthen credit unions' resolve
A letter from ACU President/CEO Linda Allen

For years, banks have publicly and legally challenged credit unions, attempting to limit who we can serve and require us to pay additional taxes, using the argument that the playing field isn't even.

And they are right - the playing field isn't even, but banks have the advantage. Because of credit unions' cooperative, not-for-profit status, we are limited to the amount of capital we can raise and how we can raise it. Through the Federal Credit Union Act of 1934, we are also restricted on who we can serve.

It is because of our cooperative "one member, one vote" structure that credit unions do not pay corporate income taxes. We already pay personal property tax, a state franchise tax, payroll tax, sales and use taxes, but banks want us to be charged the same corporate income tax that they pay.

As banks continue to try to limit us, it is important that credit unions involve themselves in legislative affairs to garner lawmakers' support.

In late 2004, Arsenal joined credit unions across the country in holding a petition drive to preserve our tax-exempt status. You may have been one of the 3,200 Arsenal members' signatures we collected here and delivered to our lawmakers in Washington, D.C. If so, I thank you. Our legislators heard us. Taxation is considered a life and death matter for the credit union movement and would seriously hinder our ability to offer low rates on loans, low fees for our services, and higher dividend rates for you.

Since our success in 1998 with the passage of state and federal legislation that clarified who credit unions could serve, banks have fought credit unions serving geographic areas and select employee groups and began suing credit unions that expanded. Expansion is necessary as it helps us diversify our base for economic stability and allows us to grow capital. Missouri credit unions now need another legislative remedy to facilitate credit union efforts to reach out and serve people in our communities. At the appropriate time, we will be asking for your help to get this legislation passed by contacting your lawmakers. Your voice does make a difference.

The struggles between credit unions and banks are ongoing. But no matter how big we get, how many members we serve or how many services we offer, we are still different in our structure and provide a viable alternative to a for-profit bank. We will continue to inform you through our newsletters and our Web site about the credit union difference and the lawsuits and legislation that will try to limit your choice as a financial consumer.

Thank you for your continued loyalty and support.

Sincerely,

Linda G. Allen