Tom Brown: Let's Tax Credit Unions

If you missed Tom Brown's an excellent column "Let's Tax Credit Unions," it is a must read.

Brown is responding to an opinion piece written by Alex Sanchez, CEO of the Florida Bankers Association, that appeared in the Wall Street Journal.

Tom Brown states upfront that there is a place for credit unions in our financial system. But then proceeds to make the case for taxing credit unions. He points out that credit unions are highly valued by their customers and tend to score better than banks in customer satisfaction surveys.

However after praising credit unions, Brown proceeds to make the case for taxation.

He notes that common bond, which was the foundation of credit unions, has become largely meaningless. He wrote:

The problem is that the definition of the “common bond” that members of a given credit union are supposed to have has become so broad as to be meaningless. Thus many big credit unions have become sizable financial institutions that are indistinguishable from banks.

He points out that "CUs have made a clear, concerted effort to find ways to expand their potential customer base to include basically everyone in the country. Some have set up shell associations and charities that new customers can “join” by paying a token fee."

He then comments on credit union buying naming rights to arenas. In his opinion, these credit unions have changed their spots.

My rule of thumb: when you start paying out money to slap your name on a sports arena, you’ve completed your transition from high-minded, communitarian do-goodism to plain old capitalism.

He concludes that now "many [credit unions] are turning into large multi-line institutions, they should be forced to play by the same rules banks do."