WASHINGTON-The banking industry's top trade group is renewing its push attacking the credit union tax exemption.
The American Bankers Association is running print and radio ads in Washington that call on Congress to repeal the exemption, which has been in place since passage of the Federal Credit Union Act in 1934.
The exemption amounts to "indefensible and outdated special treatment," according to one of the ads, which debuted in conjunction with CUNA's GAC.
According to the ABA, credit unions are pushing to loosen restrictions, such as the cap on member business loans, while enjoying a tax break that community banks cannot claim.
"Credit unions were never intended to be untaxed banks, yet that is what they have become," Frank Keating, the ABA's chief executive, wrote last week in a letter to congressional leaders.
"Our latest effort with the ads and with the letters is to really share with this new Congress that the credit union industry, as represented by the industry, is not the industry they know; they are by all accounts tax-exempt banks that compete every day with banks," James Ballentine, the ABA's chief lobbyist, told American Banker, an affiliate of Credit Union Journal.
The tax break especially benefits credit unions with more than $500 million in assets, the ABA charged in an e-mail that it sent to members of the House and Senate.
For its part, CUNA continues to argue to Congress and in the court of public opinion that the cooperative ownership of credit unions continues to warrant their tax treatment. "The ABA may be running a radio ad, but we have more than 4,200 real people in Washington ...from around the country meeting personally with their members of Congress to explain that a tax on not-for-profit, cooperatively owned credit unions is a tax on their 96-million member-owners," CUNA spokesman Mark Wolff said in an e-mail.
NAFCU sent a letter to the Hill in response to the ad, saying it "absurdly states 'Our country faces a crisis and credit unions refuse to help.'"
A $10-Billion Benefit
NAFCU's VP-Legislative Affairs Brad Thaler wrote in the letter that total benefit of the CU tax exemption is $10 billion to the U.S. economy. Loss of the tax exemption would cost the U.S. 150,000 jobs, Thaler added.
Though the White House has not taken a position on the latest effort to lift the cap, the Obama administration has previously voiced support for authorizing an increase in the MBL cap in cases where credit unions bump up against the current limit and have policies in place to ensure their safety and soundness.
