NAFCU, CUNA defend CUs in joint letter against bankers' attacks
NAFCU and CUNA are stepping up their defense of the credit union industry and its federal tax exemption as state bankers associations continue to push for its elimination with the use of misinformation, despite evidence of the industry's many benefits to consumers and the nation's economy.
The associations sent a joint letter to Sen. Orrin Hatch, R-Utah, yesterday further detailing credit unions' structure and mission, field of membership (FOM) restrictions, benefits to credit union members and the hypocrisy of bankers' attempts to eliminate the tax exemption.
NAFCU and CUNA emphasized that credit unions continue to fulfill their Congress-given mission "to promote thrift and provide access to credit for provident purposes" even while dealing with outdated FOM rules and an "outsized regulatory burden."
"Even with these restrictions and the limited market size of credit unions, they have managed to consistently pass on savings to their member-owners through better rates and member service," the groups wrote. "This is because, as not-for-profit cooperatives, credit unions focus on the member and not the shareholder.
"Perhaps banks should spend more time and effort working to improve their own industry rather than writing letters attacking credit unions who are upstanding contributors to their communities and membership," the joint letter continued.
NAFCU and CUNA also pointed out the tax benefits many banks receive as Subchapter-S corporations and will receive because of the recently enacted Tax Cuts and Jobs Act. The associations reminded Hatch of the fines and settlements big banks have paid stemming from the financial crisis, which totaled more than $135 billion.
"The banks' attack is the height of arrogance when you realize that a number of these settlements ended up being tax deductible for the banks," the joint letter said. "Analysis of these settlements has estimated the tax break value of these settlements at over $17 billion, which is more than five times the estimated annual tax expenditure for the credit union tax exemption."
The credit union trades' letter was in response to one sent to Hatch by 52 state bankers associations claiming that "lawmakers had missed an opportunity to reform the outdated and increasingly wasteful tax advantages enjoyed by the most aggressive credit unions."
NAFCU and CUNA told Hatch in Wednesday's letter that they are willing to work with the banking trade associations in order to advance regulatory relief for the entire financial services industry to provide all Americans with access to safe, affordable financial products.
Hatch last month sent a letter to the NCUA outlining concerns that credit unions are evolving away from their original tax-exempt purpose and raising questions about recent changes to FOM rules. NAFCU sent a letter addressing Hatch's questions and re-highlighted the numerous benefits of credit unions.
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