CreditUnionRuse.com, a Web site launched recently by the Massachusetts Bankers Association, is critical of the tax-exempt status enjoyed by the state’s largest credit unions.

Local bankers have resumed an old complaint about the tax-exempt status of credit unions, but this time they are bringing the argument to a new venue: the Internet.

The idea is to focus more attention on the disadvantages posed to community banks by the area’s larger credit unions, which, despite their size, enjoy a tax advantage in a competitive financial services marketplace, said Dan Forte, president of the Massachusetts Bankers Association, the trade group that has created the new Web site.

CreditUnionRuse.com, launched less than two weeks ago, is aimed at educating the public about what the MBA says are the unfair advantages credit unions have over banks and the “ruse” perpetuated by the credit union industry.

The Web site is drawing sharp criticism from within the credit union ranks, however.

The site includes numerous cartoon illustrations knocking credit unions for operating just like banks while suggesting the industry’s tax-exempt status means credit unions are getting away with something.

Using what Forte calls tongue-in-cheek humor and satire, the MBA, which represents 210 banks, is trying to call attention to what it calls the unfair advantages large credit unions – primarily the top 10 percent – have over community banks even as they compete for the same customers.

The Web site specifically mentions three Massachusetts-based credit unions as prime examples of large, “bank-like” credit unions that bankers say have grown beyond their traditional role.

HarborOne Credit Union, which has $1.3 billion in assets; Greylock Federal Credit Union, with more than $800 million in assets; and the $3.1 billion-asset Digital Federal Credit Union each have a page dedicated to them. Using cartoon images and easy-to-read text, the site satirically portrays large credit unions as used car salesmen, disingenuous politicians and other unsavory characters.

Rob Kimmett, senior vice president of marketing for the Massachusetts Credit Union League, says there is one problem with that: “They [bankers] are talking out both sides of their hat.”

“Banks act like they enjoy paying taxes,” said Kimmett. “[Banks] spend millions of dollars a year on tax-avoidance strategies. It’s much easier to find an enemy on the outside than an enemy within.”

While credit union and bank bickering dates back decades, the credit union industry is not growing at a rapid pace, said Kimmett. He said that credit unions hold 6 percent of the banking market share nationwide and have been at that level for the past 10 years.

Kimmett admits the nature of the credit union industry has changed over time, but says that all industries evolve. Many credit unions in recent years have opted to expand their charters to grow. He said it is often a matter of survival and keeping with the times. However, that does not mean credit unions have abandoned their core missions or pose new threats to the banking industry as bankers claim, he said.

“Are credit unions hurting banks? Clearly they are not. I think the idea of a not-for-profit is just so foreign to bankers,” said Kimmett of the bankers’ claim that credit unions operate with huge competitive advantages because of their tax-exempt status.

Digital Federal Credit Union officials could not be reached for comment, but Kimmett defended the credit union’s decision to buy the naming rights to the Worcester Centrum, a move criticized by bankers. He said the MBA is trying to twist things and nit-pick at the marketing strategies of the Bay State’s larger credit unions. However there is nothing wrong with advertising and it is not hurting taxpayers or credit union members, said Kimmett.

“It is a legitimate expense,” he said. “I think it is really just a question of whose interests are being looked out for. We understand there is a place for banks, and we think it’s time they realize there is a place for a robust and diverse credit union industry.”

Jim Blake, president and chief executive officer of Brockton-based HarborOne Credit Union, said his institution has notes from a 1927 board meeting that documents early discussions about efforts by bankers to promulgate legislation to strip credit unions of their tax-exempt status. It’s the same war the bankers waged way back then, only now they are trying to garner more widespread backing for their argument, said Blake.

However, Blake said he wanted to make it very clear that credit unions do pay some taxes such as real estate, FICA and payroll taxes. For HarborOne, that equals $1.5 million that the institution will pay this year, he said.

Blake said the reason credit unions don’t pay taxes on their income is because they are nonprofit institutions.

“For the banking industry, the objective is to raise profits,” said Blake. “That is not the objective of a credit union.”

Blake also criticized the banking industry for deserting some communities. He said 14 banks have left Brockton since the late 1970s. He said banks won’t stay in an area where a branch doesn’t prove profitable. However, credit unions such as HarborOne have stuck around and grown to fill the void created when so many banks checked out, he said.

“They [bankers] have to realize they are part of the [circumstances that have led to] large credit unions,” Blake said.

‘A New Low’
However, bankers say some of the credit unions are leaving their traditional niche as they reach into higher-return markets such as commercial lending. The new Web site suggests credit unions conducting such business should not be given tax-exempt status.

Forte said the bank association hopes its Web site will reach younger consumers, making them aware of the issue.

“This is drawing attention to something we have been doing for a long time,” said Bruce Spitzer, director of communications for the MBA. “The general public is not aware of the tax subsidy. It is a major public policy issue.”

According to the MBA, Massachusetts is the only state where credit unions are subject to the Community Reinvestment Act, which dictates that depository institutions reinvest in the communities they serve by also making credit available in those areas. Federal credit unions do not operate under the same requirements, said Forte. Forte said he would like to see changes to the credit union industry start at the federal level.

Forte and Spitzer said they expect the Web site will reach a national audience and hope to team up with other bank trade associations on the tax-exemption issue and see their initiative evolve into a national campaign.

Since its launch, some local banks have already begun linking CreditUnionRuse.com to their Web homepages.

Middlesex Savings Bank, headquartered in Natick, was among the first to link the site to its own Internet page. A. James Lavoie, chief executive officer of Natick-based Middlesex Savings and chairman of the MBA, said he hopes more banks will do the same.

“It’s an issue that a lot of people are not aware of,” Lavoie said. “The idea of this is to increase awareness to taxpayers and to legislators. When voters care, legislators care.”

He said he has already heard from some people who have recently explored the MBA’s Web site about credit unions and told him they learned something new.

Lavoie said he did not want to predict how much interest the site will generate or what sort of chain of events it could stir, but said as an educational tool it seems to be working.

“It will be interesting to see if it resonates with people,” he said.

One group of people it definitely is not resonating with is the credit union industry, some of whose representatives have called it a transparent attempt by the banks to bash the competition.

“The bank attacks on credit unions should be named Operation Red Herring. As usual, the bankers are trying to distract attention away from their enormous profits and the increasing global dominance of a few large multinational banks,” said John L. Bissell, senior vice president of marketing and administration at Greylock Federal Credit Union, in an e-mail to Banker & Tradesman. “The bankers’ willingness to invest in an anti-credit union campaign – rather than spending those funds in making better deals for their customers – shows how cut off they are from the people in the communities we serve.”

“There was an ax to grind and it was ground,” said Kimmett. “They [bankers] can’t understand there is a different model for a financial institution.”

Kimmett said he isn’t worried the Web site will harm the credit union industry or change consumer views toward credit unions.

“There is no one seeking any change to the way credit unions are regulated – or taxed, even – except the banks,” said Kimmett. “There is no appetite for this except from the bankers.”

Officials at some of the credit unions under attack call the MBA campaign a self-serving initiative that in the end will only benefit banks, not the general public and taxpayers as the trade association claims.

“You have to cut through the cartoons,” said Blake.