Federal Reserve Chairman Ben Bernanke said today that because credit unions are tax exempt, they need to accept certain restrictions on their activities, including a limit on how much member business lending they can do.
He told the House Financial Services Committee that credit unions enjoy a "tax-favored" status and that gives them certain competitive advantages but should be considered before granting other privileges, including raising the cap on member business lending.
"The banks would complain obviously that if credit unions are allowed to do everything banks can do, why are they tax favored? I think that's the trade-off Congress has to consider," Bernanke said in response to a question from Rep. Brad Sherman (D-Calif.)
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Sherman is a cosponsor of legislation that would raise the cap on MBLs from 12.25% of assets to 25% of assets.
Credit unions have been lobbying hard for this legislation and are hoping to attach it to some of the jobs bills that are working their way through Congress this week. It is one of the issues that attendees of CUNA's Governmental Affairs Conference are raising during their meetings with lawmakers.
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