If credit unions want to be allowed to accept supplemental capital, they should agree to pay federal taxes, said Keith Leggett, ABA vice president and senior economist.
“It’s another attempt by credit unions to be more like banks. And if they want to do that they should pay taxes, it’s a fair tradeoff,’’ he said.
Leggett said a bill introduced Thursday allowing non low-income credit unions to accept supplemental capital in certain cases also raises safety and soundness concerns.
“Allowing a credit union to issue supplemental capital eliminates the prompt corrective action tripwire aimed at slowing down rapid growth and extensive risk taking,’’ he told Credit Union Times.
The bill, introduced by Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.) gives the NCUA the power to determine if a credit union is well managed and capitalized enough to accept supplemental capital. These non-share capital accounts would be subordinate to all other claims against the credit union, including the claims of creditors, shareholders, and the NCUSIF.
Credit unions and their trade associations have been pushing for the ability to do this for several years.
“There is a pressing need for access to affordable financial services. This bill will allow us to expand service and lending to members in our community,’’ said Bethpage FCU President/CEO Kirk Kordeleski.
Kordeleski’s credit union and others, including Boeing Employees CU, have formed the Coalition for Credit Union Access to supplement the lobbying efforts of the trade associations on this access. Bethpage FCU, based in Bethpage, N.Y., has assets of $4.2 billion. Boeing Employees CU, based in Tukwila, Wash., has assets of $8.6 billion.
The King-Sherman bill has four cosponsors so far: Reps. Bob Filner(D-Calif.), Larry Kisssell (D-N.C.), Greg Meeks (D-N.Y.) and Ron Paul (R-Texas).