Banks and credit unions have issues

A recent blitz of advertising may lead the average citizen to wonder what exactly is going on with the battle between Iowa’s banks and credit unions. Depending on whom you ask, it’s either a matter of fairness or a push to unfairly punish alternative financial institutions.

Due in part to the fact that many members of Congress utilize the Navy Federal Credit Union, bankers have mostly given up on addressing the issue of taxation at the national level.

Their biggest gripe locally is that credit unions pay no state taxes, while Iowa banks pay a five percent franchise fee.

“Over the years, credit unions have expanded their services to mirror banks,” said Eldora Market Manager Shawn Bolt of Green Belt Bank. “They can provide all the same services to all the same people that we do, so obviously that seems like that’s an unfair advantage.”

Hardin County Savings Bank Board Chairman and CEO Jim Brown told The Eldora Newspapers that as the state legislature reviews the tax code, credit unions deserve a second look. He cited examples such as Veridian and the University of Iowa Community Credit Union as proof that the nonprofit institutions have stretched far beyond their original purpose, when they were tailored to low- and-middle income residents and groups of employees at large companies.

“They’ve pushed the limit on how they market, and then of course they do have some opportunities to make commercial loans now,” Brown said. “A family of four with a combined income of $40,000 would pay more state tax than a credit union.”

Read the full story in Tuesday's Ledger.