WASHINGTON–At the same time credit union representatives were hiking the Hill this week to meet with congressional representatives, the American Bankers Association sent a letter to Congress offering “Questions to Ask Credit Unions.”
The letter, from James Ballentine, EVP-congressional relations and political affairs with the ABA, told members of Congress “This week, you may be meeting with credit union representatives who are in Washington for the tax-exempt $1.1 trillion industry’s annual lobby days. We thought it would be helpful to provide you with context and a few questions you may want to ask of industry representatives when they are in your office.”
The letter adds, “Credit unions were never intended to be tax-exempt banks, but that is what many have become,” and goes on to state that recent moves by the NCUA “under the guise of regulatory relief” will “gut the most critical statutory limits that Congress has placed on the industry and will cause the cost of the tax exemption to explode.”
Ballentine’s letter urges members of Congress to ask credit unions four questions:
- How much does this cost? The ABA says the Treasury Department has estimated the 10-year cost of the CU tax-exemption is $27 billion. Specifically, the letter urges Congress to ask, “Is there concern in the industry that these recent proposals will increase the cost of the exemption even further? Do you know if the NCUA conducted a cost benefit analysis of its recent proposals? If so, can you provide that to us?”
- How do you define your membership, and why? The ABA letter says CU membership is “required by law to be limited to those that share a ‘meaningful affinity and bond,’ with community credit unions limited to service areas that are ‘well-defined’ and ‘local.’” The letter suggests Congress ask, among other things, “Would essentially open membership undercut the purpose of the credit union tax exemption?”
- Why does the industry need help from NCUA to promote business lending? The letter says that “the credit union industry is aggressively expanding into the most profitable areas, a far cry from the credit union industry of old.” According to the ABA, Congress should ask “Was commercial lending Congress’ intent when they granted credit unions an exemption from federal taxes? What is the long-term impact on state and federal revenue as more commercial lending becomes tax exempt?” among other questions.
- Does the high number of credit unions receiving the low-income designation change the need for new powers? The ABA pointed to a statement by NCUA Chairman Debbie Matz that nearly half of all CUs are now “low-income” designated even though “many of them are not located in low-income areas.” Members of Congress were urged to ask, “With nearly 50% of credit unions receiving this designation, are the pieces of legislation providing similar powers still needed? If so, why?”
The full copy of the letter can be found in CUToday.info’s The gov here.