CU-Convert Plans To Offset New Taxes
GRAND RAPIDS, Mich.-Officials of Lake Michigan CU say they don't expect to be hurt by the loss of the credit union tax exemption if they convert to mutual savings bank because of potential tax offsets.
The $965-million credit union expects to use depreciation charges it has accrued through its taxable auto leasing subsidiary to offset any new tax liability after the conversion, officials said. As a not-for-profit, the credit union has been unable to take advantage of the tax depreciation.
The credit union, the largest ever to seek conversion, plans to have its members vote in the next month or two on the charter switch, which would be followed up by a sale of stock to the public. Plans call for the credit union-turned-thrift to form a holding company and sell a minority of the institution, up to 49%, to the public in an initial public offering.
Bankers Pounce On Comments On Taxes
WASHINGTON-The bankers jumped all over remarks by a leading lawmakers this week, who said he will probe into the continued necessity of the tax exemption for credit unions and other not-for-profit entities.
"We're pleased to see a key leader like Chairman Thomas take on this long-overlooked issue," said Ken Fergeson, chairman of the American Bankers Association, of remarks by House Ways and Means Chairman Bill Thomas Tuesday.
"There should be a point at which tax exemptions end if the organizations have strayed from their original purpose. Many credit unions have morphed into full-serve financial institutions that are virtually indistinguishable from community banks." Thomas, (R-Calif.), said his committee will look at and possibly hold hearings into whether so-called 501 (c) organizations, specifically credit unions and non-profit hospitals, have strayed from their original purposes and should retain their special treatment.
"The questions is, are tax-exempt credit unions really providing more societal good than tax-paying community banks? The answer is clearly, no," said William Zuppe, chairman of America's Community Bankers, the savings and loan trade association.
John McKechnie, chief lobbyist for CUNA, told The Credit Union Journal they think such a probe is unnecessary and inappropriate, citing Treasury Secretary John Snow's remarks to the GAC endorsing the credit union tax exemption.
Restraining Order Against Website
SHAWNEE, Okla.-A state court issued a temporary restraining order against a malicious website operated by a disgruntled former employee at Bison FCU that makes inflammatory remarks about the credit union's management and directors, one of whom was running in last week's mayoral election.
"We didn't have any choice but to get an injunction," said Tony Thompson, president of the credit union, of the site at servingwho.com. The site was constructed by Bill Putman and his wife, Suzon Putman, who was forced to resign her teller's job last month. The two allege that Thompson and Chuck Mills, a member of the board and mayoral candidate, engaged in unethical behavior, abuse of employees, discrimination and malfeasance. "The accusations are false," Thompson told The Credit Union Journal. "About the only thing that is true is she resigned, in lieu of being terminated."
A court hearing on the case was scheduled for late last week.
Liberty Unveils Cross-Selling Tool
MOUNDS VIEW, Minn.-Liberty Enterprises said it has introduced a new product that will help credit unions cross-sell products and services.
LibertyDirect for Credit Bureaus provides the credit union account-opening desk with an instant credit screen that shows a wide range of products for which the new member qualifies. The main requirements of the service are Internet access and a relationship with one of the major credit bureaus.
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