WASHINGTON — As nearly 1,500 bankers were preparing to lobby lawmakers for regulatory relief and a rollback of the credit union tax exemption, Sen. Mike Rounds, R-S.D., gave the bankers some advice: Leave the credit unions out of it.
“When it comes to regulatory reform and when it comes to a lot of the other challenges that are out there, you are going to have to agree to disagree on the issue of taxes with those credit unions and you are going to have to find a way to work with them with a lot of the other regulatory reforms,” Rounds, a member of the Senate Banking Committee, said Tuesday at the American Bankers Association meeting here.
The tax exemption for credit unions has long pitted banks and credit unions against each other. Some bankers see lawmakers' interest in a possible tax reform plan as an opportunity to gain an upper hand on the credit union exemption issue.
“Tax reform will be done at some point this year and that could bleed into next year. … If there is any time to get rid of a Depression-era tax exemption, it is right now,” James Ballentine, executive vice president at the ABA, said as he was giving bankers talking points on key pieces of legislation.
“The amount of money, the amount of customers credit unions are pulling from the banking industry is outdated,” Ballentine said.
However, when asked whether he would support getting rid of the tax exemption, Rounds said bankers would be better off working with credit unions to get Dodd-Frank Act reforms.
“Agree to separate [credit unions' tax exemption] out, please, when you are talking about the regulatory reforms” while “you are up here knocking on doors,” Rounds said. “I think you can get the regulatory reform, but you and the credit unions are going to have to work together to get that done.”