The American Bankers Association and 52 state bankers associations today urged lawmakers in the House and Senate to hold a hearing to determine whether the credit union industry’s tax exemption is justified by the community benefit it produces. In a letter to the leaders of the House Ways and Means Committee and Senate Finance Committee, the groups said that credit unions have strayed from their original mission as nonprofits designed to provide consumer financial services to those in need. Instead, they acquire banks, issue subordinated debt and offer nationwide membership.
“Credit union growth, while theoretically positive for the communities credit unions serve, is only beneficial if it is accompanied by congressional oversight and careful regulatory supervision that accounts for the potential consequences of that growth on the credit union model. … As credit unions continue to grow, Congress has a responsibility to ensure that disclosure and transparency requirements keep pace and provide adequate documentation of responsible stewardship of taxpayer funds,” the associations said.
The associations added that they welcome competition and recognize that it benefits U.S. households. However, they also believe that American taxpayers deserve accountability and that financial institutions awarded special tax and regulatory treatment should live up to their stated missions, noting it has been two decades since Congress last held a hearing on the credit union tax exemption. “Hearings once every 20 years are not enough for the 140 million consumers who use credit unions, nor the taxpayers who subsidize their services,” they said.
