California Fed Panelist Snipes at Tax Exemption
The banker head of a California-based Federal Reserve panel, who formerly ran a credit union, said Wednesday she welcomes CU input in deliberations of a Fed-run committee but that sharp remain about the tax exemption.
“I believe when credit unions act like banks they ought to be paying taxes,” declared Kay Hoveland, president/CEO of the $900 million Kaiser Federal Bank of Covina, Calif., which converted from Kaiser Permanente FCU in 1999.
Hoveland is chief representative of the nine-member Community Depository Institutions Advisory Council of the Federal Reserve Bank of San Francisco.
The panel, one of 12 across the country set up by Chairman Ben Bernanke last year to gain grassroots input from community banks and CUs, has met only once, in February.
The San Francisco CDIAC, chartered to give advice to the Fed Board in Washington on regulatory concerns, payments matters and local economic conditions, includes just one credit union CEO. He is Ron Barrick of the $753 million Advantis CU of Milwaukie, Ore.
“I know they will be adding more CEOs to our CDIAC but it is hard to get people to serve,” said Hoveland. The San Francisco Fed so far is the only one to have just one CU representative. Others have at least two and some three.
A San Francisco Fed spokeswoman pledged to have one named by the next CDIAC meeting in the fall. Completing formation of its CDIAC comes at a time of transition in San Francisco Fed leadership with a new president taking over in March.
As for the CDIAC discussions and the tax exemption, Hoveland said “it seems only fair” that CUs pay taxes in the current economic environment.
The Covina banker, who sits on the national CDIAC as the12th Fed District representative, said the discussion was lively and intense with both CU and bank CEOs participating at an April 1 meeting in Washington.
“Oh yes, the Fed got an earful on Dodd-Frank and probably lots more than they deserved,” said Hoveland referring to the debit interchange clash.
Mark Wolff, senior vice president-communications at CUNA, said Hoveland’s tax exemption swipe was more of the same anti-CU banker rhetoric.
“By ‘acting like banks’ Ms. Hoveland appears to be referring to the services credit unions offer—that’s a line we often hear from those in the banking industry. But scope of services has never been the reason for credit unions’ federal tax status,” said Wolff. “It’s because credit unions are structured as member-owned, democratically controlled, and not for profit cooperatives. Banks do not fit that model.”