In addition, their tax exempt status permits them to offer higher deposit interest rates and lower loan rates. Community bankers in direct competition say their banks operate under stiffer government regulations and are at a disadvantage. Credit union representatives agree that industry growth has resulted in more competition between banks and credit unions. Their position is that this is healthy and helps consumers. Credit unions state that there are still significant differences between the two types of institutions.
Credit unions are still cooperative organizations serving only their members.
The institutions operate under more restrictive loan and investment powers. They point out the banking industry is constantly working to increase permissible lines of business and to streamline regulatory requirements. In general, current financial modernization legislation would increase bank powers but does not affect credit unions. Another area of debate involves the importance of credit unions operating in low-income or underserved areas. Bankers argue their industry has also made significant steps to reach out to this population.