Bankers Bid For CU Tax
WASHINGTON - (11/04/05) -- The powerful banking lobby made itslong-awaited best pitch Thursday to congressional tax-writers toconsider repeal of the credit union tax exemption. The bankerspressed their case during the first congressional hearings into thecredit union exemption in 70 years that large, diversified creditunions have abandoned their mission of serving the underserved andnow rsemble 'tax-free banks,' so should pay the same federal incometaxes as banks. These large credit unions, according to JeffPlagge, president of First National Bank of Waverly (Iowa), who wasrepresenting the American Bankers Association, "are financingluxury hotels, buying naming rights on sports stadiums and buildingluxury headquarters." The bankers were joined by a panel ofnon-partisan critics of credit unions, including the NationalCommunity Reinvestment Coalition--and surprise witness, former NCUAChairman Norman D'Amours--who called on Congress to enact aCommunity Reinvestment Act-like law for credit unions to requirethem to serve the underserved in exchange for continuation of thetax exemption. But Navy FCU President Cutler Dawson insisted to thecongressional tax-writers the world's largest credit union is nodifferent than the world's smallest, when it comes adhering to itsmission to serve the underserved; while Harriet May, president ofGovernment Employees CU, El Paso, Texas, said no matter the size orability of the credit union, the tax exemption continues to flowback to a broad base of Americans. "Credit unions employ the taxbenefit by passing it through to their members, primarily lowerrates on loans, lower fees and higher returns on savings," saidMay. She also pointed out the indirect benefits of the credit uniontax exemption, such as acting as a competitive check on bankingrates.