Credit unions are like banks. That’s at least the way they seem to most consumers.
But they’re not like banks to regulators. Banks are for-profit, while credit unions are non-profit.
For-profits wear the black hats, while not-profits wear the white hats.
It’s sad but true.
Yet both operate as corporations. This means that, roughly, they bring in revenue, they subtract out costs, and what’s left is profit.
Banks get taxed on that profit.
Credit unions, as non-profits, manage their business to get that profit number to zero.
How do they do this? Well, either by reducing revenue, or increasing costs. But no one ever seems to reduce revenue, so increasing costs is most it.
So when, say:
MidFlorida, the fifth largest credit union in the state—with $2.1 billion in assets—paid an undisclosed amount for the naming rights to an amphitheater in Tampa while developing some of the most lavish office spaces and branches throughout the state.
Make no mistake: a bank could do this. But a bank is far less likely to do this because its goal is to maximize what’s left over, not make sure nothing is left over. Of course, the credit union could just give the money back to its members, but that would also be tax free at this level.
In other posts, I’ve defined welfare as a voluntary exchange in which 1) you get more than you give up, and 2) one of the the other parties is the government.
This makes credit unions the recipients of corporate welfare: a bank doesn’t pay more for naming rights than they’re worth, but they can be outbid by a credit union because the government has its back.
Oh … and … regulators don’t force credit unions to make loans in bad neighborhoods.
In fact, think about it, when did you ever see a credit union that wasn’t in a richer, whiter, neighborhood? Here we go again with the rich people co-opting the political system to collect welfare.