WASHINGTON-CUNA and its affiliated state leagues last week, faced once again with defeat of legislation that would expand CUs' member business lending authority, were calling on Senators to also kill the Transaction Account Guarantee (TAG) bill that bankers have been pushing for.
The effort came at the same time some bank lobbyists were urging legislation that would have taxed revenue related to member business loans.
In short, the credit union strategy last week meant that if CUs don't get their bill, then the bankers shouldn't get their bill either, with the CU trade groups acknowledging that passage of a standalone bill on MBLs in this Congress is very unlikely.
CUNA was telling all senators the bank-backed TAG bill is "risky and unnecessary" and does not inspire additional business lending by banks. TAG would extend the federal guarantee on all non-interest bearing accounts for banks and credit unions.
Credit unions' new anti-bank offensive came as the banking lobby appeared to have once again defeated efforts by credit unions to get an increase in the 12.25% of assets limit on member business lending.
An Unprecedented Effort
In an unprecedented effort, CUNA issued a call to action last week urging executives and volunteers at 7,000 credit unions and 50 state credit union associations across the country to contact their Senators and oppose the bankers' bill, something never undertaken before by the credit union lobby.
'No Need' For Legislation
"There is no need for this legislation; senators should vote 'no' if it comes to a vote," said CUNA President Bill Cheney.
The credit union effort came on the heels of efforts by bank lobbyists that sought to have tax implications attached to any MBL bill should it have gotten before Congress. The language bankers were seeking would have taxed all revenue from MBLs.
The bankers, knowing there was little chance of getting their long-sought repeal of the credit union tax exemption, see the tax provision as a means to make the dim prospects of a bill in the current lame duck Congress painful-were credit unions to ever finally get a vote.
"This would be a poison amendment," Paul Merski, executive vice president of the Independent Community Bankers of America, told Credit Union Journal last week.
Bankers have been seeking to sell the MBL tax as another measure of raising government revenue to help fight the federal deficits, according to Merski, who expressed confidence the bill MBL bill is dead anyway. "It's game over for this year," he said.
The language of the bankers' amendment would specify that income earned from MBLs shall be exempt from Section 122 of the Federal CU Act, which explains the federal tax exemption for credit unions. It does not remove the overall tax exemption for credit unions.
Both the ICBA and the American Bankers Association delivered a letter to all senators last week insisting that the credit union bill not be added to a bill renewing the federal guarantee on interest-bearing transactions accounts favored by banks.
CUs Oppose TAG
Meanwhile, groups such as the American Bankers Association and the Independent Community Bankers of America, have been pushing to renew TAG, even as some influential financial institutions are fighting it. Money-market funds and some large banks, for instance, could benefit from its expiration.
CUNA and NAFCU now joins groups like the Financial Services Roundtable, a trade group for the largest banks, in opposing the extension.
"Congress should allow TAG to expire because it is no longer necessary; it is risky; it has not proven to enhance bank business lending; and there are better policy options to help small businesses access credit," wrote CUNA's Cheney in a Dec. 3 letter to Senate leaders.
