Credit unions already have ample lending authority

Not only is Alaska’s three-legged stool economy threatened by declining federal spending and dwindling flow through the Trans-Alaska Pipeline System, a small group of credit unions is threatening to undercut Alaska’s business tax base. These credit unions are pressuring Congress to increase their business lending authority, promising that it will increase small business lending.

Don’t believe it.

Sen. Mark Udall’s (D-Colo.) harmful legislation would shift loans that are already in the pipeline at community banks to credit unions that don’t pay taxes. Alaskans simply cannot expect community banks to continue underpinning the economic health of Alaska’s diverse communities if they support the credit unions’ mission creep.

Credit unions already have ample small business lending authority and can make as many loans as they want under $50,000. This new proposal applies only to a small number of new breed credit unions that want to go after corporate loans made by taxpaying community banks, robbing those banks of the ability to support greater lending in neighborhoods and communities across Alaska and America. You don’t have to be an economist to see that an industry subsidized by the federal government will easily out-price one that pays roughly one-third of its revenue in taxes, a typical bank’s tax burden.

Credit unions were granted nonprofit status for their mission of serving a specified group of people of modest means — a worthy mission. But if a credit union now wants to change its mission and perform the function of a taxpaying commercial bank, they should not be granted that ability or be given the privilege of paying taxes on the portion of their new income that has been historically considered taxable income for a bank. What’s more, that portion of their business, which is the same as a commercial bank, should be regulated in the same manner as the rest of the nation’s commercial banks. To put it another way — if it walks like a duck and quacks like a duck, it’s a duck.

In the achievement of our community bank’s mission, First National Alaska has helped Alaskans and Alaska businesses succeed for 90 years. That same commitment to Alaska is what drives our banking activities and outreach to this very day. Although credit unions have distorted the facts to suggest otherwise, we have plenty of money to lend and actively seek to make every good loan we can. We also contribute annually and generously — some $1 million in 2011 — to diverse Alaska nonprofits and charities.

Why then, when the nation is facing increasing deficit spending and Alaska is looking at ways to sustain our economy and quality of life for years to come, would we reduce business tax income (Alaska’s only tax income base) by shifting business to a nonprofit?

Please join us in telling Sens. Lisa Murkowski and Mark Begich to stand up for community banks and oppose S. 2231.

Cheri Gillian is a 42-year Alaska resident, dedicated to the success of First National Bank Alaska’s customers, employees and neighbors.