NCUA Board Member Debbie Matz has sent a letter to the Democratic Leadership Council objecting to a DLC proposal to remove the tax exemption for credit unions of more than $10 million in assets. In the letter, Matz, who is the Democrat on the board, states that "removing this tax exemption would jeopardize credit unions' financial safety and soundness and cause other negative public policy results."
The letter goes on to explain credit union structure and how any tax "would erode their net worth and cause many credit unions to fall below the level established by Congress to protect safety and soundness. Once a credit union falls below the statutory level, the law requires NCUA to take a series of 'Prompt Corrective Actions.' These required actions may result in the credit union being merged or liquidated out of business." Matz went on to tell Al From, the DLC's CEO, that taxation would also have another "unintended consequence-many credit unions would no longer have the capital needed to establish branches in underserved communities."
"Although the proposal divides credit unions by an arbitrary asset figure, credit unions of all sizes offer small loans to assist members through emergencies, free counseling to help members out of seemingly insurmountable debt, and affordable mortgages to help first-time homebuyers who could not qualify for conventional loans," Matz said.
