Former Federal Regulator Says Real Challenge To CUs At The State Level
The former chairman of the federal credit union regulator is urging more be done to fight CU taxation on the state level.
"What bankers are doing has nothing to do with taxing credit unions on the national level today," Dennis Dollar told attendees of the California Credit Union League's annual convention here. "They are trying to build towards taxation in the future by working on a state-by-state basis."
Dollar led an educational session on the impact the recent election will have on credit unions. He said the fact the re-elected President Bush is strongly supportive of the CU tax exemption should not lull credit unions into a false sense of security. Instead, he noted, banks will try to build momentum on the state level so they can go back to Congress in a few years and claim there is a "national movement" in place to tax CUs.
"The most likely way to national taxation of credit unions in the near future is if a tax reform bill moves through Congress with the goal of 'closing loopholes.' Credit unions must rally their members to support them," said Dollar. "Banks can match or beat credit unions on spending, but bank customers are not going to rally to support banks. And, as a former state legislator (from Mississippi), I know it is hard to go vote 'yes' on a bill when you have received hundreds or thousands of letters or phone calls urging you to vote 'no.' "
According to Dollar, the Community Reinvestment Act is not likely to be imposed on CUs, as the CRA has a limited support base among Republicans. He said there is some interest being expressed in making it less burdensome on banks, but none on extending it to credit unions.
He does expect the increased Republican Senate majority (to 55 seats from 51) will increase the chances of getting bankruptcy reform legislation passed. However, since it takes 60 votes to stop a filibuster, this is not a given. Dollar noted a bankruptcy reform bill in the last session was derailed by a threatened Democratic filibuster.
NCUA Board Seats
One of the biggest direct effects President Bush will have on CUs in his second term will be the appointment of two new board members at the National Credit Union Administration.
The board has been operating with only two members since Dollar stepped down-with one member from each party: JoAnn Johnson, a Republican, and Deborah Matz, a Democrat. Bush could appoint a Democrat now to replace Dollar, but that would grant a Democratic majority. Matz's term ends in August 2005. Dollar said one likely scenario would be for Bush to nominate one Democrat and one Republican together next year, making it unlikely either party would attack the other's nominee during confirmation hearings.
"I don't know what the White House will do," said Dollar. "I know the White House is evaluating Republican candidates right now, and has a list of eight names. When I left, I didn't lose any sleep about leaving a two-member board because I had confidence the two members would get along and put their partisan differences aside. Thus far, there have been no visible signs of fissure, which is a credit to both of them."
"For the most part, regulatory issues are non-partisan," he added.
Dollar said it should be alarming to the CU community that Bill Thomas, a Republican from Bakersfield, Calif., continues as chairman of the House Ways and Means Committee. However, he doesn't see much impact brought by the defeat of Thomas Daschle (D-SD), which will bring a new Senate Minority Leader.