FOR IMMEDIATE RELEASE
ICBA Applauds Ways and Means Committee for Examining Credit Union Tax-Exemption
Washington, D.C. (October 25, 2005) - The Independent Community Bankers of America (ICBA) applauds Ways and Means Committee Chairman Bill Thomas (R-CA) for scheduling an oversight hearing for November 3 to review the tax-exempt status of credit unions. For years ICBA has been urging Congress to examine the unfair tax inequities imposed by today's aggressively growing $660 billion tax-exempt credit union industry.
"Now more than ever Congress needs to re-evaluate the large and growing tax subsidy granted credit unions," said Camden R. Fine, ICBA president and CEO. "Recent independent research by the nonpartisan Tax Foundation estimates a $31 billion tax loss to the U.S. Treasury from the credit unions' special tax subsidy over the next ten years, yet finds no evidence they used this tax subsidy to better serve low and moderate income people - a prime reason for their special tax status."
"Today more than 100 mega-credit unions each have $1 billion or more in assets. These institutions often supply the wealthy and the broad middle-class with financial services, offer a wide range of sophisticated banking products and business loans, and compete directly and aggressively against taxpaying community banks. Yet these same institutions don't pay taxes and don't bear the same regulatory burden as community banks," added Fine.
"Congress should also be alarmed with the rapid expansion of tax-exempt credit unions into commercial lending and their aggressive pursuit of even greater powers under the guise of regulatory relief," said Fine. Congress originally allowed credit unions tax advantages for the purpose of serving individuals of modest means. However, the credit union industry has actively expanded into the commercial lending business and is pressing support of H.R. 2317, the Credit Union Regulatory Improvement Act (CURIA), that would raise the current statutory cap on "member business loans" to 20% of a credit union's net worth, up from 12.25%; double the limit on loans exempt from this cap to $100,000 from $50,000; and weaken the restriction on undercapitalized credit unions from making business loans.
"We greatly value the ongoing work of the Ways and Means Committee and urge that greater equity and parity can be achieved in the tax code between tax-exempt credit unions and taxpaying community banks," said Fine.
For more information and a copy of the Tax Foundation's credit union study, visit ICBA's website at www.icba.org/cu.