CU Tax-Exemption Could
Be Debated This Week
WASHINGTON-In what credit union lobbyists see as an ominous sign, the tax-writing House Ways and Means Committee is expected to hold hearings as early as this week focusing on the credit union tax exemption. The hearings would be an extension of the committee's review of the tax-exempt status of thousands of 501(C) groups, including hospitals, charities and religious organizations.
Committee staffers have already discussed the topic and invited the Internal Revenue Service to appear at the hearing, which is being billed at this time as exploratory. But sources say the committee, headed by sometime credit union critic Bill Thomas (R-CA) may be looking at the credit union tax exemption as a possible source of federal revenues as the federal budget deficit is expected to explode from its already record levels, as expenses from Hurricane Katrina relief and the continued wars in Iraq and Afghanistan, add to the government's red ink.
Even though the credit union exemption has strong support in Congress, the credit union lobby is always attuned to any potential threats, which are constantly fueled by the powerful banking lobby.
Officials at the committee did not return calls from The Credit Union Journal last week.
Reg-Flex CUs To Be Allowed To Self-Insure
ALEXANDRIA, Va.-The NCUA board last week, with its only sitting member Chairman JoAnn Johnson, approved a new rule allowing large well-run credit unions that qualify for Reg-Flex to increase the deductible on their fidelity bonds to as much as $1 million-effectively allowing them to self-insure for the first $1 million of losses. The current maximum allowable deductible is $200,000.
The new rule increases the maximum required deductible, on a sliding scale, for all credit unions over $1 million in assets that qualify as well-managed under the agency's regulatory flexibility, or Reg-Flex program. So for credit unions under $100,000 no deductible is required; for those between $100,000 and $250,000 a $1,000 deductible is required; for those between $250,000 and $1 million a $2,000 deductible is required. For credit unions over $1 billion in assets, a deductible of $1 million is required.
Ex-CEO Among Those Banned
ALEXANDRIA, Va.-The former president of Raleigh County FCU was barred from the credit union industry for embezzling $127,000 from the $9- million credit union, NCUA. Vicky Bolen, 53, of Princewick, pleaded guilty last year to siphoning the funds from CU accounts between December 1996 and June 2002, and was sentenced to 21 months in jail. NCUA also said it banned Elizabeth Miller, former manager of Monteleone Hotel ECU, New Orleans, for stealing more than $250,000. Also banned by NCUA were: Maria Martini, former assistant manager at Regalbuto FCU, New York City, and Teresa Lauw, former chairman of the board at Florida Health Systems FCU, Miami.
Potential Dam Break Is Threat
TAUNTON, Mass.-With a dam above town threatening to burst due to heavy rains, two credit unions in this city were operating last week, although one was working out of a Hampton Inn. Morton FCU was operating as usual but didn't need to close even with the threat the 150-year-old wooden dam might break.
Taunton FCU, meanwhile, which had also closed for 2 days, opened a branch at the hotel. Taunton EVP John Damaso said the access road to the main office has been closed by officials and prevented front office staff from reporting to work. Those employees relocated to the temporary hotel branch, where Damaso said all normal banking transactions are taking place, with mortgage closings occurring according to schedule. A reduced staff in the backoffice is working at the main office as local emergency officials expect any floodwaters to flow away from the building. Damaso said Taunton FCU had gotten a great deal of support from area financial institutions, especially Eastern Bank and Pawtucket CU in Rhode Island. Damaso also said a Loomis truck was on schedule to make a cash delivery.