Letters To Hill, FDIC Defend CU Tax Status
CUNA sent two letters to Capitol Hill last week defending the credit union tax exemption.
CUNA said the letters from CEO Dan Mica point out the "playing field is level enough" for banks and credit unions, and that the not-for-profit focus of credit unions continues to justify the federal tax exemption. The letters, addressed to Senate Banking Committee Chairman Richard Shelby (R-AL), and FDIC Chairman Don Powell, were sent Monday.
In the letter to Shelby, Mica responded to correspondence to the Banking Committee chairman from the bank trade group America's Community Bankers, in which the issue of credit union-to-bank conversions was noted.
Mica told Shelby that what is missing from the bankers' letter was "any acknowledgement of the fact that the primary beneficiaries of such conversions are often insiders-members of the board of directors and the management group who wind up with substantial amounts of stock." Mica asserted that it is clear that ACB believes insider profit has higher priority than member rights.
In the letter to the FDIC's Powell (who has called for the taxation of credit unions twice in the last month), Mica noted that a level playing field between credit unions and banks might make sense "if the game is between players of the same species."
Mica pointed to what he said were various advantages that banks have over credit unions (including the ability to tap the capital markets, lower capital requirements, and no statutorily required capital levels), Mica wrote "it is quite clear that the playing field is...perhaps even tilted toward banks."