Under fire from some banking organizations, advocates for the credit union industry defended the tax-exempt status of credit unions in a letter to Senate Finance Committee Chair Sen. Orrin Hatch (R-UT).
Hatch has also received a letter from state bank organizations recently requesting a public hearing on credit unions tax-exempt status.
Officials from the Credit Union National Association (CUNA) and the National Association of Federally-Insured Credit Unions (NAFCU) responded with a missive to Hatch explaining why the banks are misinformed in questioning the tax-exempt status.
“The banking lobbyists would like the tax status to be limited based on the products or services credit unions offer, the size of credit unions individually and as a sector of the financial services industry, their efforts to support their community and raise overall awareness, and other factors. But these factors have nothing to do with why Congress originally conveyed the tax status, nor why it continues to be extended. The fact is credit unions’ structure has not changed and they continue to fulfill their mission,” CUNA President and CEO Jim Nussle and NAFCU President and CEO Dan Berger wrote to Hatch.
Nussle and Berger added that banks, many of which have been hit with fines and settlements for violations, should worry about keeping their own house in order.
“The numbers speak for themselves when you look at big bank fines and various settlements and buy-backs stemming from the financial crisis that total over $135 billion in penalties paid by big banks,” the credit union officials wrote. “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! 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.”