FOR IMMEDIATE RELEASE
ICBA Opposes Expansion of Powers for Taxpayer-Subsidized Credit Unions
Taxing Credit Unions Would Help Reduce National Debt
Washington, D.C. (January 15, 2010)—The Independent Community Bankers of America (ICBA) today sent a letter to Senate leaders expressing strong opposition to a proposal being pushed by credit unions that would significantly expand the powers of credit unions. ICBA also recommended that Congress repeal the credit unions’ tax-exempt status to help reduce the national debt.
“Credit unions should demonstrate they can satisfy the basic statutory mission that Congress spelled out for them before attempting to expand their powers into more complex and specialized fields,” said R. Michael Menzies, ICBA chairman and president and CEO of Easton Bank and Trust Co., Easton, Md. “Adding the credit union proposal to a jobs bill would do more to promote the interests of large, multi-bond tax-exempt credit unions than to create new employment opportunities.”
In the letter, ICBA called attention to a study conducted by the non-partisan Tax Foundation, which found that credit unions’ tax subsidy is contributing to the national debt by more than $30 billion over 10 years. “During this period of skyrocketing federal deficits, it would be more prudent and beneficial to our national economy to repeal the credit unions’ tax exemption to help reduce the national debt,” ICBA says in the letter.
Any increase in credit union commercial-lending activity under the credit union proposal would likely be at the expense of taxpaying community banks, whose bread and butter business is small-business lending. There is no evidence to support the contention that credit for small businesses is in short supply, as community banks have been lending to small businesses in their communities throughout the economic crisis. ICBA goes on to say that siphoning a portion of this business away from tax-paying community banks would threaten their ability to continue to serve their communities and be counter-productive to the goals of any jobs package.
ICBA has also consistently expressed concerns about expanding credit unions’ commercial-lending powers, because credit unions were created by Congress, and given generous tax and regulatory advantages, for the purpose of serving individuals of modest means. It is doubtful that Congress ever envisioned credit unions making commercial loans, and studies have questioned credit unions’ ability to achieve their statutory mission of serving people of small means.
Furthermore, ICBA raises concerns in the letter about the overall safety and soundness of the credit union industry, which raises serious questions about the credit union industry’s ability to serve people in their community just to satisfy their congressional mandate. “Now is certainly the worst possible time to expand credit union powers into such a highly specialized and technical field such as business lending,” ICBA says.
ICBA looks forward to working with the Senate to ensure that any future jobs bill does not include unnecessary and counterproductive proposals, such as the expanded credit union powers, that would not contribute to the real goal—to reduce the unemployment rate and put America’s hardworking citizens back to work during this critical time.
To read ICBA’s comment letter, visit www.icba.org.