The NCUA's rescue plan for corporate credit unions should "cast doubt on the wisdom and the fairness of their tax-exempt status," Independent Community Bankers of America President/CEO Camden Fine wrote Treasury Secretary Tim Geithner today.
Fine wrote that the NCUA plan--which he referred to as a "taxpayer bailout of the credit union system''--was necessitated by financial difficulties triggered by a failure of prudent lending by corporate and natural person credit unions.
He added that the need for the NCUA to conserve five corporate credit unions and develop a plan for dealing with their legacy assets shows that the corporates' judgment is no better than Wall Street banks that had to be bailed out.
"But at least those banks pay taxes in good years when they make profits,'' he said.
CUNA President/CEO Bill Cheney defended the NCUA action and the tax-exempt status of credit unions.
"This is just another desperate attack by bankers on the credit union tax exemption-when the bankers know, full well, credit unions are paying every dime of what it will cost to resolve the unfortunate situation with these wholesale corporate credit unions. Banker hypocrisy clearly knows no bounds,'' he said in a statement.
NAFCU Executive Vice President B. Dan Berger wrote Geithner a letter in which he stated that "it is ironic that a trade association which represents institutions that make up the majority of TARP 'deadbeats' would attack another industry for actually solving an issue themselves and paying their own blls.''
Berger added that the NCUA's action isn't a bailout because "the taxpayer isn't being stuck with the tab.''