If credit unions want to be allowed to accept supplementalcapital, they should agree to pay federal taxes, said KeithLeggett, 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 fairtradeoff,'' he said.

Leggett said a bill introduced Thursday allowing non low-income credit unions toaccept supplemental capital in certain cases also raises safety andsoundness concerns.

“Allowing a credit union to issue supplemental capitaleliminates the prompt corrective action tripwire aimed at slowingdown rapid growth and extensive risk taking,'' he told CreditUnion Times.

The bill, introduced by Reps. Peter King (R-N.Y.) and BradSherman (D-Calif.) gives the NCUA the power to determine if acredit union is well managed and capitalized enough to acceptsupplemental capital. These non-share capital accounts would besubordinate to all other claims against the credit union, includingthe claims of creditors, shareholders, and the NCUSIF.

Credit unions and their trade associations have been pushing forthe ability to do this for several years.

“There is a pressing need for access to affordable financialservices. This bill will allow us to expand service andlending to members in our community,'' said Bethpage FCUPresident/CEO Kirk Kordeleski.

Kordeleski's credit union and others, including Boeing EmployeesCU, have formed the Coalition for Credit Union Access to supplementthe 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 $8.6billion.

The King-Sherman bill has four cosponsors so far: Reps. BobFilner(D-Calif.), Larry Kisssell (D-N.C.), Greg Meeks (D-N.Y.) andRon Paul (R-Texas).