Pub. 9 2014-2015 Issue 1

www.nebankers.org 8 Extraordinary Service for Extraordinary Members. Turning Up the Heat on the Credit Union Tax Exemption Frank Keating , President & CEO, American Bankers Association Washington Update Email Frank Keating at keating@aba.com . © 2014 American Bankers Association. All rights reserved. Reprinted with permission. W HEN CREDIT UNION EXECU- TIVES gathered in Wash- ington recently for their annual government affairs conference, they found themselves in an unusual place. Their top legislative priority was the preservation of their tax-exempt status. It’s a sign of success for our advocacy on the issue that credit union executives must have this conversation with law- makers. Our advocacy is forcing credit unions to play defense and to answer tough questions. Together, ABA, the Nebraska Bank- ers Association, and bankers like you have worked to keep the question of why credit unions should enjoy tax- exempt status front and center with policymakers. We’re continuing to turn up the heat. While the credit union executives were here in Washington, we shared a new brochure with lawmakers on Capitol Hill that demonstrates—with pictures and graphs—how credit unions have outgrown both their mission and tax exemption. It spotlights, for instance, credit unions that have spent inap- propriately on elaborate headquarters and sporting event and arena naming rights. It also shows how credit unions are ignoring membership restrictions and their mission of serving low- and moderate-income individuals—the very individuals Congress envisioned them serving. (You can download the bro- chure, “Credit Unions Have Outgrown Their Mission and Tax Exemption,” at aba.com/ItsTimetoPay. ) We further promoted our message in print and radio ads targeted to poli- cymakers. Through the state bankers associations, we also asked bankers like you to write letters and send tweets about the issue. Thousands of you re- sponded, sending more than 26,000 letters to Congress just as credit union execs were “hiking the Hill.” We aren’t forgetting the other tax- advantaged competitor that community banks face. Under the guidance of our Ag Credit Task Force, we have formally asked for congressional oversight hear- ings on the Farm Credit System (FCS) and its regulator. We are hopeful such hearings will be scheduled, giving us the opportunity to educate policymakers on how far FCS has drifted from itsmission. Congress’ tax reform debate also provides an opportunity to raise these issues. Unfortunately, Rep. Dave Camp (R-MI) did not put the credit union and Farm Credit System tax breaks on the table when he unveiled a draft tax reform bill in February. But the bill is just a starting point. We know the conversation will continue into the next Congress—perhaps beyond—and ABA will make sure community banks’ tax- subsidized competitors are part of it. Bankers, too, will need to stay en- gaged. The credit unions rally their troops easily by painting this as a life- or-death issue. Of course, it is not. We know it is possible to both pay taxes and stay in business. But they have a sense of urgency, and so should bankers. The Office of Man- agement and Budget (OMB) recently estimated that the forgone tax revenue from the credit union tax exemptionwill amount to $3 billion annually by fiscal year 2019. The subsidy is growing because cred- it unions are. We need to work together to make sure policymakers understand the implications—and fundamental unfairness—of that. 