WILLIAMSBURG, Va.-In preparation for an anticipated taxationfight again next year in a number of states, the NationalAssociation of Community Credit Unions during its annual meetingprovided a panel of credit union representatives all too familiarwith the problem. First from Salt Lake City, Utah, Mountain AmericaCredit Union Senior Vice President of Industry and MembershipDevelopment Fred Nydegger emphasized that you cannot turn your backon the banks, or trust them. “Watch their agenda. Know what theywant; they want your members,” he warned. He pointed out howdeceptive they can be, like the Utah bankers' idea for theResolution Alliance for Strong Banks and Credit Unions that neverinvolved credit unions or asked a credit union to the table. Muchof the bankers' arguments for the taxation of credit unions is thatthere is not a level playing field. Nydegger agrees there is not alevel playing field, “I buy it, because we're not playing the samegame.It's structure and service that makes a difference.” Buttaxation is not all that the banks were after in Utah. Beyond a 5%tax on credit unions, they wanted to institute a 30% competitiveequity “fee,” meaning that credit unions would not be able to maketax deductions from it as the banks can. While credit unions wonthe taxation issue in Utah in the end, they were stripped of theirmember business lending authorities and the bankers got “exempt”and “non-exempt” terms put in the law that did pass in preparationfor the possibility of taxation in the future. Another piece ofadvice from Nydegger to credit unions that may face this samesituation in their states is to start a war chest because “you'renot going to be able to raise enough money in one year.” It's alsoimportant to establish and strengthen relationships with lawmakersand educate them on the credit union difference. States also needto activate grassroots efforts. In New Mexico, the experience wassimilar. According to First Financial Credit Union President andCEO Jeff McDaniel, the bankers' had agreed not to oppose a creditunion 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 whichwere considered to be credit union friendly. McDaniel said that thebankers had misrepresented the bill to them and they were furiouswith the bankers. When the others realized it would only affect onecredit union-First Financial-bringing in only $250,000, it wasdropped. The bankers then proposed a memorial, similar to aresolution in the U.S. Congress, very scathing to credit unions tostudy taxation, but this lost in committee 8-2. The lesson McDanieltook away from this experience was similar to Nydegger's. “We werefortunate to have a very excellent lobbying force in place,” heconcluded. He added that you cannot take a wait and see attitudebecause everything moves so fast once it gets started and politicsis very much an `insider' game. In Iowa, credit unions narrowly wonthe fight again. When the University of Iowa Credit Union proposedthe purchase of Hawkeye Savings Bank, the debate over `why docredit unions hold so much capital?' was sparked, Dupaco CreditUnion President and CEO Bob Hoefer explained. It is important toexplain why credit unions do hold so much capital, he emphasized.Ironically, the proposal was denied for capital concerns. The billproposed 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 abattle and suggested that credit unions offer payroll deductions tomake it easier for employees to contribute funds to the [email protected]

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