Matz Says CU Tax Exemption Safe, Providing...

Register now

PORTLAND, Ore.-National Credit Union Administration (NCUA) Board Member Debbie Matz said there are several ways that credit unions can prevent taxation and thereby protect their safety and soundness.

"I closely watched the tax debates in your state legislature and several other states," Matz told attendees at the Credit Union Association of Oregon's Annual Business Meeting. "I wish I could tell you that since you were successful in preventing a tax on credit unions in this year's session, you won't be threatened again in the next session. But the efforts to tax credit unions are ongoing. The safety and soundness of the entire credit union system is threatened by taxes."

Matz emphasized that "lawmakers will have more reasons to preserve the tax exemption when credit unions reach out to everyone in their field of membership."

Matz also pointed to four services that she said help turn potential members into actual members:

1) Alternatives to Predatory Lending. "For some people, the most meaningful service you can provide is an alternative to having to go to payday lenders, title companies, or pawnshops," Matz explained. "Credit unions that make small loans and risk-based loans are not just filling immediate needs. They are starting lower-income people on the path to a healthier financial future, and gaining loyal members for life."

2) Affordable Mortgages for First-time Homebuyers. "Although 67% of credit unions make mortgages, only 2% of all mortgages are made by credit unions," Matz pointed out. "There are tremendous opportunities to reach out to potential members who do not yet own a home - including single mothers, minorities and recent immigrants. Through affordable mortgages, credit unions can help all types of members build wealth, and at the same time expand credit unions' market share."

3) Financial Literacy. "Financial education is important for all income levels, just as it is for all age levels," Matz observed. "You can teach people to become better savers, better buyers, and ultimately, long-term credit-worthy members. That's an incentive to help everyone in your field of membership become financially savvy."

4) Member Business Loans. "You may be surprised to learn, as I was, that nearly half of credit unions' business loans go to members with low-to-moderate incomes," Matz said, citing studies from the U.S. Treasury Department and the Small Business Administration. "Often, small business owners cannot get loans anywhere else.Those who get business loans from credit unions may transfer in their personal accounts as well as their business accounts, making the credit union their primary financial institution."

Matz told the Oregon audience that "from a public policy standpoint, lawmakers weigh any group's tax exemption against the public good. Lawmakers want to hear what good work you have done to help constituents in their communities. For that reason, offering these services may help preserve the tax exemption for credit unions."

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER