TORONTO – Reminiscent of the Sunday expeditions of her childhood, NCUA Chairman JoAnn Johnson has asked credit unions three vital questions: Where are we? Are we there yet? How much longer?
She urged credit union officials attending NAFCU's Annual Conference to ask themselves, "Where are you as a credit union and are you where you expected to be by now?" Johnson said this is important to answering questions that have been asked by Congress as to how credit unions are earning their tax-exemption. She urged them to see the on-going data collection effort as an opportunity to explore how their particular credit union is doing and promised NCUA would be as unobtrusive as possible while completing the process. The chairman said the agency is on schedule to complete the process by the Office of Management and Budget deadline of Aug. 31, 2006. And just like kids asking "are we there yet?" even though the answer was evident by looking out the window, so too Congress is raising this question of serving people of modest means. "I don't believe we're at our destination. I don't believe you're at your destination.It's an on-going journey-one I hope will last a long, long time," Johnson commented. Included in that journey is increasing financial literacy and growing and retaining new members. She also discussed Bank Secrecy Act compliance and acknowledged the complexity of it. That is why NCUA will be offering a free Webinar on the issue and will be working with NAFCU and others to make it as easy and far-reaching as possible.
Under the subheading of "how much longer?" Johnson predicted the issue of the credit union tax-exemption would be an issue around "as long as potholes." However, she does not believe it will gain traction. She pointed out that she has a close relationship with her home-state senator, Finance Committee Chairman Charles Grassley (R) and stated that he understands the unique nature of credit unions, even though he does not get as much press as his counterpart in the House, Ways & Means Committee Chairman Bill Thomas (R-Calif.)
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Apropos for Toronto, Johnson pointed to the Canadian credit union experience with taxation. "The credit union movement would be fundamentally altered and not for the better," she said.
And what of risk-based capital? When will credit unions see some reform there? Johnson said this October when the banking regulators are supposed to take up BASEL II again could be a great opportunity for credit unions. She added that she continues to make the case on the Hill and with Treasury that will help NCUA and credit unions "manage and assess risk more effectively." Under the proposed system, Johnson said credit unions would have some capital freed up to even better serve their members. [email protected]
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