In 2007, the Wisconsin Bankers Association released a study that examined the lending and expansion trends for the largest credit unions in Wisconsin. The findings clearly show a pattern away from serving low- and moderate-income populations in favor of focusing on higher income customers.

The analysis demonstrates that a significant level of large Wisconsin credit union home lending activity flows to higher income households. To the extent that credit unions use their tax exemption to lower home lending rates, federal and state income tax exemptions are subsidizing borrowing by high-income households. 

The WBA study comes on the heels of similar studies conducted by the National Community Reinvestment Coalition (NCRC) in 2005 and the Government Accountability Office (GAO) in 2006. Both studies concluded that credit unions lag behind banks in serving low- and moderate-income populations and raise questions about what taxpayers receive in exchange for the credit union industry’s multi-billion dollar tax subsidy.

Over the next 10 years, the credit unions’ tax subsidy will approach $400 million in Wisconsin and $31 billion nationally. Can Wisconsin afford tax exemptions that may no longer be warranted from a public policy perspective?