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The National Credit Union Administration (NCUA) and the General Accounting Office (GAO) recently released highly anticipated reports on credit union service to members. These studies were requested after last year’s much followed hearing held by the House Ways and Means Committee on credit union tax status in November 2005.
 NCUA’s “Member Service Assessment Pilot”, which surveyed 448 federal credit unions nationwide, sought information on how credit unions served their members, including those of modest means. The NCUA said the collected data reflect 60% of the membership of the average federal credit union has a median family income of less than $60,000 annually; 82% has less than $75,000; and 96% has a median family income of less than $100,000. Compared to the U.S. population, 44% of members have incomes below the U.S. median. Credit union member incomes are concentrated in middle-income ranges rather than the lowest or highest income ranges.
The Credit Union National Association (CUNA) commented that the NCUA report verifies credit unions are serving exactly who Congress intended: middle income, working Americans seeking to improve their lives, but who live largely from paycheck to paycheck. In addition, CUNA said the congressional record is full of references that make it clear Congress has intended credit unions to have a special mission of serving the broad working class of America – and had no intention of limiting credit union service to only the poorest Americans.
Shortly after NCUA released its report, the GAO released one of its own and similarly concluded that credit unions are doing what Congress intended: serving middle-income, working men and women. The GAO report also did not make any legislative recommendations for credit unions in its report. However, the report suggests the NCUA should:
- Systematically obtain information on income levels of credit union members;
- Monitor the progress of credit unions serving low- and moderate-income individuals;
- Take action to ensure information about federal credit union executive salaries is available to members and the public; and
- Explore and periodically review the benefits of expanding NCUA's three-seat board to five.
In regard to the GAO report, CUNA commented that although it noted credit unions serve a lower proportion of low-and moderate-income members than do other financial institutions, it also indicated credit unions are subject to numerous field of membership restrictions that hinder the ability of credit unions to reach these consumers.
"The effect of these restrictions results in credit unions serving a greater proportion of moderate and middle income members than do banks," said Dan Mica, CUNA President/CEO. He also pointed out the GAO's report acknowledges inadequacies in the data it used to assess the income of credit union members. Mica also emphasized the GAO report provided an extensive analysis of the more attractive deposit and loan rates that credit unions pay and charge compared to similar-sized banks, which he said "strongly supports CUNA's view that it is indeed the members who benefit from credit unions' not-for profit, tax-exempt status."
Unlike the NCUA report, the GAO study was intended to have a broader scope embracing not only credit union service to members of modest means, but also applications of Unrelated Business Income Tax (UBIT) to credit unions, NCUA governance issues, and other issues. The IRS is expected to release UBIT guidance during the first quarter of 2007.
Retiring House Ways and Means Committee Chairman William Thomas (R-Calif.) in a four-paragraph statement called the GAO report "balanced," but noted that "many questions remained unanswered--reinforcing the idea that the NCUA and credit unions need to enhance their transparency and data collection."
Despite a lack of comparable information between the two reports, the details presented in the GAO report on credit union and bank executive salaries strongly suggests that credit union executive salaries are consistent with their not-for-profit status.
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