Newsroom
July 20, 2016
Berger sets record straight on CU tax exemption, MBL
NAFCU President and CEO Dan Berger wrote Rep. Steve King, R-Iowa, Wednesday to set the record straight on misinformation surrounding the credit union tax exemption, NCUA's recent MBL rulemaking and the agency's field-of-membership proposal.
Berger wrote in response to a letter King sent to House Ways and Means Chairman Kevin Brady, R-Texas, in which he alleged credit unions' tax exemption costs too much money and that NCUA has improperly expanded credit union membership and lending authority.
Berger defended the importance of the credit union tax exemption and noted that nearly one-third of banks are Subchapter S corporations that pay no federal corporate income tax. He also pointed out that credit unions helped keep the economy going during the financial crisis, while banks have been hit with more than $100 billion in fines, settlements and buy-backs stemming from their role in causing the crisis.
"Luckily, our nation's 103 million credit union members (including 1.1 million in Iowa) were able to get financial services from their credit union during the crisis," Berger wrote. "A 2014 independent study found that Iowa consumers benefitted to the tune of $1.4 billion from the years 2005-2013 due to the presence of credit unions, and our nation's economy saw a benefit of nearly $17 billion per year."
Berger also cited a Small Business Administration study showing that bank business lending has been largely unaffected by changes in credit unions' business lending, and that credit unions' lending can help offset declines in bank lending during recessions. He emphasized that the MBL changes made by NCUA were within the agency's purview and did not remove or expand the statutory cap on MBLs, which Congress controls.
Berger also noted that NCUA is still limited by Congress-set restrictions on credit unions' fields of membership and that NCUA's FOM proposal, which is still under review, would not change that.
"It is true that credit union membership has grown, but mainly from consumers fleeing the predatory practices of banks and turning to credit unions," Berger wrote.
NAFCU remains vigilant in its effort to preserve the credit union tax exemption and will continue to monitor the tax reform debate in Congress for potential impact on credit unions.
Berger wrote in response to a letter King sent to House Ways and Means Chairman Kevin Brady, R-Texas, in which he alleged credit unions' tax exemption costs too much money and that NCUA has improperly expanded credit union membership and lending authority.
Berger defended the importance of the credit union tax exemption and noted that nearly one-third of banks are Subchapter S corporations that pay no federal corporate income tax. He also pointed out that credit unions helped keep the economy going during the financial crisis, while banks have been hit with more than $100 billion in fines, settlements and buy-backs stemming from their role in causing the crisis.
"Luckily, our nation's 103 million credit union members (including 1.1 million in Iowa) were able to get financial services from their credit union during the crisis," Berger wrote. "A 2014 independent study found that Iowa consumers benefitted to the tune of $1.4 billion from the years 2005-2013 due to the presence of credit unions, and our nation's economy saw a benefit of nearly $17 billion per year."
Berger also cited a Small Business Administration study showing that bank business lending has been largely unaffected by changes in credit unions' business lending, and that credit unions' lending can help offset declines in bank lending during recessions. He emphasized that the MBL changes made by NCUA were within the agency's purview and did not remove or expand the statutory cap on MBLs, which Congress controls.
Berger also noted that NCUA is still limited by Congress-set restrictions on credit unions' fields of membership and that NCUA's FOM proposal, which is still under review, would not change that.
"It is true that credit union membership has grown, but mainly from consumers fleeing the predatory practices of banks and turning to credit unions," Berger wrote.
NAFCU remains vigilant in its effort to preserve the credit union tax exemption and will continue to monitor the tax reform debate in Congress for potential impact on credit unions.
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