By Rebeca Romero Rainey
The nation’s tax-exempt credit unions have big plans for their multi-billion-dollar tax subsidy—a nationwide marketing campaign funded by the rest of us.
Apparently in the interest of transparency in government funding, the Credit Union National Association recently said it plans to raise $100 million over the next three years to launch an awareness program called “Open Your Eyes to a Credit Union.” I guess buying up stadium naming rights isn’t cutting it anymore.
This taxpayer-subsidized investment in the expansion of growth-oriented financial firms certainly is eye-opening. But with the Joint Committee on Taxation calculating the credit union industry’s tax exemption at more than $10 billion through 2021—and with the largest credit unions now nearing $100 billion in assets—they should have little trouble raising the money. After all, it’s coming out of your paycheck.
Unfortunately for taxpayers, the price of the credit union subsidy keeps going up. The annual cost of the tax exemption is nearly $2 billion and rising. And with the National Credit Union Administration working nonstop to drastically increase the powers of the industry it is charged with regulating beyond their statutory limits, credit unions have become virtually indistinguishable from taxpaying banks.
No wonder Congress is beginning to rethink the tax exemption, which lawmakers established to enable people of small means with a “common bond” to pool their financial resources. Senate Finance Committee Chairman Orrin Hatch (R-Utah) has expressed concern that credit unions are operating beyond this purpose and has called on large credit unions to report financial information required of other tax-exempt institutions.
Hatch’s proposal comes after NCUA Chairman Mark McWatters admitted that the industry’s fund insuring credit union deposits would be at risk without taxpayer subsidies. This admission raises questions about the management of the fund and concerns about the sustainability of the industry’s growth, underscoring the need to review and ultimately abolish this taxpayer handout.
With the NCUA tied up in court over its unlawful efforts to expand the industry’s reach, Americans nationwide should join community bankers in demanding greater equity and accountability in how our financial services sector is taxed and regulated. It is time for all of us to open our eyes to the misuse of our tax dollars by a rapidly expanding industry that profits from an unlevel playing field.
Rebeca Romero Rainey is president and CEO of ICBA.