WASHINGTON–Credit unions, and specifically those who represent CUs on Capitol Hill, are increasingly fielding questions challenging the credit union tax exemption, and one person does not expect the attention will be letting up anytime soon.
Numerous issues have led to the greater scrutiny in Washington of the CU tax exemption, including allegations related to Navy FCU and its mortgage lending practices, CU acquisitions of banks, and just the overall asset growth of credit unions, with more than 400 CUs each now topping $1 billion assets. And more than happy to fan the flames of the issue have been the banking trade associations.
Jason Stverak, chief advocacy officer with the Defense CU Council, said he and other advocates in Washington, along with credit unions themselves when hiking the Hill, do increasingly hear about the tax exemption.
“We get asked questions,” he said, noting such inquiries can include why institutions of $10 billion or even $50 billion need a tax exemption, whether “you’re a credit union anymore,” and “whether we still need this.”
‘Not Reported Enough’
“That's where it becomes incumbent upon us to educate,” he said. “I think one of the most important things is, if it’s a bank selling to a credit union, the great majority of the time the bank stays stay, the people stay employed, and the money stays local. That story is incredibly important to share up on Capitol Hill. The fact is it’s not being acquired by some out-of-state or foreign conglomerate. It's your neighbors who want to make sure that that branch stays open to serve that community.
“I think that's the story that sometimes does not get reported enough,” Stverak added. “When a bank sells to a credit union the community thrives as there is still a local financial option available.”
But it’s a story that even when told on Capitol Hill can get lost among the other stories being told by credit union opponents, according to Stverak.
‘A Challenge on Capitol Hill’
“Frankly, it's a challenge up on Capitol Hill, where you have the ABA, the ICBA, and every banking association meeting with staffers, meetings with members (of Congress),” said Stverak. “You don't go more than two or three weeks without a letter from the ICBA attacking our tax status. But that tax is a small pittance compared to what credit unions are able to do to serve their communities. The additional revenue, the additional benefit paid back to the community is 10 or 20 times” what any tax revenue would be should the exemption be eliminated.