NAFCU defends industry as Hatch questions CUs' FOM rules
NAFCU defended credit unions' federal tax exemption and the benefits it provides to the nation's economy, as well as the NCUA's role as a strong, independent and transparent regulator in a letter Wednesday responding to questions from Sen. Orrin Hatch, R-Utah, regarding credit unions' field of membership rules.
Hatch sent a letter to NCUA Chairman J. Mark McWatters yesterday outlining concerns that credit unions are evolving away from their original tax-exempt purpose and raising questions about recent changes to field of membership rules. Hatch noted that the tax exemption requires that the "government closely oversee the credit union industry to ensure that it continues to fulfill its intended purpose." NAFCU holds that changes made to the NCUA's field of membership rules are well within the agency's legal authority and are in keeping with the Federal Credit Union Act.
Hatch, chairman of the Senate Finance Committee which has oversight on tax policy, noted credit unions' tax-exempt status was provided to aid in their mission to provide low-cost credit to members in need.
"The credit union tax exemption has long provided a tremendous value to credit union members and the overall economy of the United States," wrote NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt. Hunt directed Hatch to an independent study NAFCU commissioned last year that found the credit union tax exemption provides a $16 billion per year benefit to the U.S. economy. She also highlighted that the tax exemption "ensure[s] that credit unions remain low cost providers of provident credit."
In addition to questioning the industry's recent changes to fields of membership, Hatch questioned credit unions providing services outside of their original mission, including insurance, wealth management and real estate brokering.
Hatch requested that McWatters respond to his seven questions related to field of membership, services credit unions offer to members and executive compensation by April 6.
In 2016, the NCUA finalized a NAFCU-supported field-of-membership rule, which was the first meaningful update to the agency's field of membership rules in more than a decade. NAFCU has long advocated for the changes included in the rule in order to help federal credit unions reach potential members who want and need affordable financial services.
Last month, Reps. Gwen Moore, D-Wis., and Paul Cook, R-Calif., introduced a NAFCU-sought bill that would allow credit unions of all charter types to add underserved areas to their fields of membership.
NAFCU will continue to advocate for modernized field of membership rules and defend the credit union tax exemption. Maintaining a strong, independent NCUA as the primary regulator for credit unions is also one of the association's 2018 priorities.
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