Berger to lawmakers: Bankers' attacks have no merit
In response to attacks from the Independent Community Bankers of America (ICBA) challenging credit unions' federal tax exemption and the NCUA's actions as an independent regulator, NAFCU President and CEO Dan Berger hit back, arguing that "the true nature of their request is political, and designed to stymie competition."
Last week, ICBA called on Congress to investigate the NCUA's role in the New York taxi medallion issue, and questioned credit unions' tax status. Berger, in response, sent letters to House Financial Services Committee Chairwoman Maxine Waters, D-Calif., and Ranking Member Patrick McHenry, R-N.C., and Senate Banking Committee Chairman Mike Crapo, R-Idaho, and Ranking Member Sherrod Brown, D-Ohio, to defend the industry.
Berger highlighted the economic benefits of the credit union tax status and noted the hypocrisy of bankers' calls to eliminate it.
"When ICBA tries to drag the tax status of credit unions in to the debate, they fail to mention that nearly one-third of banks, including a number of their members, are Subchapter S corporations and pay no corporate income tax," Berger said. "Furthermore, as a result of the Tax Cuts and Jobs Act of 2017, their members have benefitted from additional tax breaks to the tune of $21 billion.
"When banks were lobbying for tax reform, they claimed that they would reinvest those savings into their communities. What did the banks do instead? They loaned less, fired employees by the thousands and padded their shareholders' pockets," he added.
Berger also explained the NCUA's role as credit unions' regulator and that the National Credit Union Share Insurance Fund (NCUSIF) "is self-sustaining and is not funded by the U.S. Department of the Treasury or the American taxpayer."
"Unlike banks and the Deposit Insurance Fund, all federally-insured credit unions keep a 1 percent deposit in the NCUSIF. The mutual nature of the NCUSIF means that the capital of all credit unions stands between the fund and the American taxpayer," Berger wrote. "The NCUA oversees and administers the NCUSIF, and credit unions expect the NCUA to be a strong regulator due to this mutuality. Counter to the ICBA's claims, this creates a strong built-in disincentive in the industry for a weak regulator."
Access Berger's letters here. NAFCU will continue to defend the industry against unwarranted attacks.
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