Regarding "Let credit unions lend more" [Editorial, Dec. 6], President Barack Obama frequently states that everyone must pay their fair share. It seems that does not apply to credit unions. Newsday's presumption that banks don't want increased competition from credit unions is as misleading as Sen. Kirsten Gillibrand's (D-N.Y.) statement that her legislation to raise the capacity of credit union commercial lending "won't cost the taxpayers anything" ["More credit union lending proposed," Business, Dec. 5].
Banks compete with credit unions, and we don't mind the competition. But we do mind paying approximately 30 to 40 percent of our profits in income taxes, while credit unions pay zero. As a whole, credit unions avoid paying $31 billion a year in income taxes because of their not-for-profit status.
Credit unions sometimes pay customers marginally higher interest rates on deposits and charge marginally lower rates on loans. However, those slight benefits fall far short of them paying their fair share in income taxes.
When a tax-exempt credit union takes a customer or prospect from a bank, it also takes income tax money associated with those profits from the taxpayer. It's time for credit unions to lose their antiquated tax exemption.
In 1934, the federal government authorized credit unions to provide banking services to underserved communities, affinity groups (employees of one company) or a specific profession like teachers. Today, their membership has grown almost without limitation, allowing membership through "community" status, which on Long Island includes Nassau and Suffolk county employees. Bethpage and Teachers Federal credit unions have combined assets of almost $10 billion, and their service areas are far from underserved.
The assumption that increasing credit union limits on commercial lending from 12.25 percent of assets to 27.5 percent would allow $1 billion in new loans in New York and ultimately create 11,000 jobs statewide raises several concerns. What's not being taken into account is the current lack of demand for loans. Banks can and are willing to lend many more times that amount and can also generate the same or more jobs.
If the National Credit Union Association is going to regulate which credit unions receive higher capacity and have them demonstrate sound underwriting and business loan servicing practices, then the credit unions won't be in a position to make any more loans than banks.
Douglas C. Manditch, Islandia
Editor's note: The writer is the chief executive of Empire National Bank.