Credit unions defend tax exemption in meeting with Mnuchin
WASHINGTON — Credit union executives defended the credit union tax exemption during a meeting Tuesday with Treasury Secretary Steven Mnuchin.
Mnuchin is leading the Trump administration’s tax reform efforts and credit union advocates are fearful policymakers could target their exemption from federal taxes. During the meeting, the National Association of Federally-Insured Credit Unions presented a January 2017 study that found "removing the credit union tax exemption would actually cost the federal government $38 billion in lost income tax revenue over the next 10 years.”
The study also concluded that 900,000 jobs would be lost over the next 10 years without the exemption and that consumers save $16 billion annually because of their credit union membership.
The NAFCU delegation also discussed housing finance reform, regulatory relief and business lending restrictions with Treasury.
NAFCU has called for the inclusion of an explicit government guarantee in any housing finance reform efforts as well as recapitalizing Fannie Mae and Freddie Mac. It has also favored loosening lending rules that would allow credit unions to make more business loans by doubling the business lending cap to 27.5%.
Credit unions are also seeking an exemption from oversight by the Consumer Financial Protection Bureau.
But Dan Berger, president and chief executive officer of NAFCU, said the conversation, which included Mnuchin as well as senior adviser Craig Phillips and Treasury chief of staff Eli Miller, was broad.
“We started talking about the impact of Dodd-Frank and how that affected credit unions and community based financial institutions, which was a segue into talking about the impact of rules that have been promulgated by the [Consumer Financial Protection Bureau]," he said. "The ones that have been promulgated and the ones that are being looked at.”
Berger said they discussed a June report released by the Treasury which outlined a number of recommendations for financial regulation. Treasury will release four more reports on financial regulations, with the final one likely to touch on financial technology.
“We talked about the three other reports that are coming out. We got two or three don’t really affect us – more for securities — the last report that is coming out” will address fintech “and we will be submitting some comments along the fintech lines,” said Berger.
Berger attended the meeting along with Carrie Hunt, the trade group's head of government affairs and general counsel.
Other credit union executives present were: Richard L. Harris, NAFCU board chair and president and CEO of the $1.6 billion-asset Caltech Employees Federal Credit Union in La Canada, Calif.; Jan N. Roche, president and CEO of the $1.8 billion-asset State Department Federal Credit Union in Alexandria, Va.; and Lynette Smith, president and CEO of the $108 million-asset Washington Gas Light Federal Credit Union in Springfield, Va.
“The secretary was extremely engaged, it was an extremely productive meeting. He asked a lot of follow-up questions and I think we both learned something from one another in the meeting,” said Berger.