Consumers Will Pay for Loss of Tax Exemption, Cheney Says

In a letter to the co-chairs of the National Commission on Fiscal Responsibility and Reform, CUNA President/CEO Bill Cheney wrote that if credit unions lose their tax-exempt status, consumers will pay the price.

Cheney said the tax exemption allows credit unions to save their 92 million members about $7.5 billion a year. “Credit unions’ favorable pricing also helps to improve bank rates and moderate their fees. Yet faced with federal income tax liability, a number of credit unions may no longer feel compelled to operate a credit union and could close or convert to for-profit banks. These institutions have far different incentives than do credit unions and are driven by the desire to return a profit to shareholders rather than ensuring favorable rates are provided to consumers,” he wrote to NCFRR co-chairs Alan Simpson and Erskine Bowles.