Congratulations to the Iowa Hawkeye football team on a memorable Holiday Bowl win. The Hawkeyes dominated the game from the opening kickoff, playing nearly error-free with intensity and purpose. Competing against a fairly matched team on a level playing field, the Hawkeyes certainly represented Iowa well.

Clearly, the same cannot be said for San Diego County Credit Union, sponsor of the Holiday Bowl. Their brash “Don’t Feed the Bankers” television advertisements blatantly exposed what is wrong with large credit unions in our country. Mega credit unions are exploiting U.S. taxpayers and SDCCU, like so many of their kin, doesn’t seem to mind flaunting its tax privilege.

For Iowans unfamiliar with this mega credit union, SDCCU was originally chartered in 1938 as San Diego County Employees Credit Union. Its modest purpose was to serve the financial needs of county government employees. During the 1970s, SDCCU relaxed its membership requirement and now is open to everyone living or working in three densely populated counties, comprising nearly 9 million residents. And what if you don’t live or work within these three counties? No problem! Just join the Financial Fitness Association for an $8 membership fee and you’re in. Thus, SDCCU membership is essentially unrestricted, which explains how their membership has ballooned to over 400,000 and they have amassed $8.3 billion in assets. It also helps to explain why they would spend millions sponsoring and advertising during a national sporting event. So much for the “common bond” membership requirement intended for credit unions.

In 2018 SDCCU generated a profit of $106 million after spending $16 million on marketing and promotion. Yet, as a “not-for-profit” cooperative, SDCCU paid no state or federal income taxes. A bank earning this amount would have paid over $20 million of federal income taxes as well as an additional amount for state income taxes. Moreover, SDCCU does not return any of its profits to its members in the form of a dividend, but it does manage to pay its CEO total compensation of over $3.2 million. Does this sound like a non-profit worthy of a complete income tax exemption?

You might be asking yourself what my beef is with this California-based institution. My gripe is that this abusive credit union conduct is occurring all across our country, including Iowa, with the consent of regulators and lawmakers. Nationally, the credit union industry has grown to over $1.5 trillion in assets, and is costing Americans about $3 billion in forgone federal income tax revenue annually, plus a substantial loss of state income tax revenue. And who pays for this tax give away? You and I, of course.

While the vast number of credit unions continue to be relatively small institutions adhering to the concept of a common membership bond, rapid growth by large aggressive institutions has concentrated 75% of the entire industry in just 5% of credit unions. And Iowa is no different. There are 87 credit unions headquartered in Iowa. The four largest credit unions (GreenState, Veridian, Dupaco, and Collins) have combined assets of $13 billion, representing 61% of the state’s total $21 billion of credit union assets. These four mega credit unions posted combined profits of over $146 million in 2018, all of which escaped income taxation. In plain terms, these credit unions paid zero, zilch, nada. Banks would have paid $30 million in federal income tax and $7 million in state income tax on these profits. Again, you and I pay additional taxes because credit unions pay none. Or think of it another way. What could the State of Iowa do with an additional $7 million of revenue? Perhaps put the money towards mental illness, education, water quality, Medicaid, or other critical issues facing our state?

I can take a punch from credit unions bashing the banking industry. I know that their sensational criticisms are unfounded, as community banks like mine treat our customers fairly and provide generous support to the communities we serve. What I cannot tolerate is credit unions abusing their tax subsidy to propel exponential growth which further cannibalizes the income tax base, and then having the gall to disparage my tax paying, for-profit business. But that is my opinion. The real question is, are you, the taxpayer, willing to continue taking punches from these mega credit unions? After all, you are footing the bill for their tax privilege.

Again, congratulations to the Hawkeyes on their resounding win. And thank you to San Diego County Credit Union for so shamelessly reminding us that banks and credit unions aren’t competing on a level playing field. In this game, it is the taxpayer that loses.

Greg Gannon, president

DeWitt Bank & Trust Co.