Credit Unions War With Banks: Is There An Unfair Advantage?

In the battle for retail consumer financial services, have community charters and federal tax breaks tilted the competitive advantage in credit unions’ favor? Two researchers from the Federal Reserve system take a look.

Richard Anderson, Vice President of the Federal Reserve Bank of St . Louis, and Yang Liu, a Senior Research Associate also with the Federal Reserve, examine how competition between credit unions and banks has evolved since the 1998 Credit Union Membership Access Act relaxed membership regulations for credit unions.

Arch Enemies Lock Horns

Banks and credit unions are aggressive competitors. And as it is with any industry where firms compete, each side points fingers saying that the other has an unfair advantage. At its core, the issue for bankers is whether a federal tax exemption tilts the competitive balance toward credit unions and away from banks, particularly community institutions…

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