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WASHINGTON-Credit unions were on the lips of nearly every speaker at America’s Community Bankers Government Affairs Conference last week. ACB Chairman William W. Zuppe said of credit unions, “it’s not a movement, it’s an industry,” and called credit union competition “simply not fair.” While previously, he said, it may have sounded like the bankers only went to the Hill to “rant and rave” about credit unions, “now we’ve got some bullets in our gun.” He thanked House Ways and Means Committee Chairman Bill Thomas (R-Calif.) for his remarks regarding a hearing looking into the value of certain nonprofits’ tax-exemption, including credit unions. Even though the program was running over and she was the only one standing between the attendees and lunch, ACB CEO Diane Casey Landry made three quick points for the afternoon Capitol Hill visits. The very first one was to spread the word of ACB’s support of hearings on credit unions’ tax-exempt status. She stated, “It’s very reasonable to ask people to listen.” The other two issues she wanted raised on the Hill were GSE reform and deposit insurance reform. The credit union trade groups have said that other members of the Ways and Means Committee have said they do not support hearings on the credit union tax exemption. During a luncheon with reporters following the General Session of the GAC, Casey Landry said, “The last time I checked there was only one chairman of the committee and if he decides he wants to hold hearings, he can hold hearings.” ACB Executive Vice President and Managing Director of Government Relations Robert R. Davis emphasized that it is appropriate for the Ways and Means Committee to review the value of tax-exempt organizations and question those that are morphing beyond their original tax-preferred purpose. He added that it is important that this issue be resolved for credit unions as well because then credit unions could get on with expanding their powers without banks interfering. As the community bankers set out for the Hill, they were provided talking points on a number of issues, including credit unions. Here is what the ACB wants Congress to do: * Investigate “the government-created competitive disparity” between credit unions and community banks, especially mutuals; and * Eliminate the tax exemption for credit unions that act like banks. ACB also ran an advertisement in The Hill newspaper and others read on Capitol Hill. The ad features a large yellow rubber ducky that reads, “If it quacks like a duck.Credit unions that want to play like banks should pay taxes like banks.” * Banks are only asking for a level playing field and large credit unions offering the same services to the same people as tax-paying financial institutions have an unfair advantage. * In 10 years, a bank and credit union each of $100 million in assets and all other things being equal would not remain so. With annual compounding, the credit unions would increase its asset size to $187.4 million, while the community bank would only increase to $118.9 million. * Credit unions are not just small shops serving people of modest means. * Subchapter S banks pay tax on every dollar of retained earnings while credit unions pay nothing. * Large, bank-like credit unions, sometimes larger than local banks, are not required to make special efforts to serve low-income consumers. * The Credit Union Regulatory Improvements Act (H.R. 3579) would compound credit unions’ competitive advantage and it should not be supported unless credit unions are taxed. ACB’s talking points conclude: “Now is the time for legislators to do the right thing. Today, virtually every American qualifies for membership in a credit union. What if everyone opted for tax-subsidized financial services that did not have community reinvestment responsibilities?” [email protected]

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