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WILLIAMSBURG, Va.-In preparation for an anticipated taxation fight again next year in a number of states, the National Association of Community Credit Unions during its annual meeting provided a panel of credit union representatives all too familiar with the problem. First from Salt Lake City, Utah, Mountain America Credit Union Senior Vice President of Industry and Membership Development Fred Nydegger emphasized that you cannot turn your back on the banks, or trust them. “Watch their agenda. Know what they want; they want your members,” he warned. He pointed out how deceptive they can be, like the Utah bankers’ idea for the Resolution Alliance for Strong Banks and Credit Unions that never involved credit unions or asked a credit union to the table. Much of the bankers’ arguments for the taxation of credit unions is that there is not a level playing field. Nydegger agrees there is not a level playing field, “I buy it, because we’re not playing the same game.It’s structure and service that makes a difference.” But taxation is not all that the banks were after in Utah. Beyond a 5% tax on credit unions, they wanted to institute a 30% competitive equity “fee,” meaning that credit unions would not be able to make tax deductions from it as the banks can. While credit unions won the taxation issue in Utah in the end, they were stripped of their member business lending authorities and the bankers got “exempt” and “non-exempt” terms put in the law that did pass in preparation for the possibility of taxation in the future. Another piece of advice from Nydegger to credit unions that may face this same situation in their states is to start a war chest because “you’re not going to be able to raise enough money in one year.” It’s also important to establish and strengthen relationships with lawmakers and educate them on the credit union difference. States also need to activate grassroots efforts. In New Mexico, the experience was similar. According to First Financial Credit Union President and CEO Jeff McDaniel, the bankers’ had agreed not to oppose a credit union reform bill planned for the legislative session. However, they turned around and introduced the same bill as was in Utah, which would have taxed credit unions over $100 million in assets, among other things. The bill had five co-sponsors, two of which were considered to be credit union friendly. McDaniel said that the bankers had misrepresented the bill to them and they were furious with the bankers. When the others realized it would only affect one credit union-First Financial-bringing in only $250,000, it was dropped. The bankers then proposed a memorial, similar to a resolution in the U.S. Congress, very scathing to credit unions to study taxation, but this lost in committee 8-2. The lesson McDaniel took away from this experience was similar to Nydegger’s. “We were fortunate to have a very excellent lobbying force in place,” he concluded. He added that you cannot take a wait and see attitude because everything moves so fast once it gets started and politics is very much an `insider’ game. In Iowa, credit unions narrowly won the fight again. When the University of Iowa Credit Union proposed the purchase of Hawkeye Savings Bank, the debate over `why do credit unions hold so much capital?’ was sparked, Dupaco Credit Union President and CEO Bob Hoefer explained. It is important to explain why credit unions do hold so much capital, he emphasized. Ironically, the proposal was denied for capital concerns. The bill proposed in Iowa would have limited credit union loans to $350,000, prevented new branches and prohibited member business lending, according to Hoefer. He also talked about the expense of such a battle and suggested that credit unions offer payroll deductions to make it easier for employees to contribute funds to the fight. [email protected]

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