Recent efforts in Congress put credit unions at risk of losing their federal tax exempt status. Credit unions say the change could hurt their services and membership. Banks support the change to what they say gives credit unions an unfair competitive advantage.
Credit unions should be able to handle the loss of the tax exemption, and not have to change the way they do business," says UAB finance professor Andreas Rauterkus. "They will still have a competitive advantage over banks due to member ownership."
However, Rauterkus said it would only be fair to remove certain restrictions, such as loan limits, from credit unions if the tax exemption is removed.
"It's just not fair to take something away without giving them something for it," Rauterkus said. "It's a two-way street, but I haven't heard that from banks."