House Majority Leader Backs Credit Union Tax Exemption as Well as Sub S Status

WASHINGTON- Credit unions have the support of House Majority Leader Tom DeLay (R-Texas) on the growing taxation debate. DeLay recently sat down with the staff of CUNA’s CU NewsWatch for a Q&A and came out in favor of credit unions’ tax-exempt status, among other things. In the June 28 edition of CU NewsWatch, the congressional leader said he supports corporations’-including banks-ability to elect a Subchapter S status. However, DeLay added, “I am equally supportive of Americans’ right to voluntarily pool their resources for their own benefit and not be taxed on such an effort. Credit unions embody this principle, and I firmly support the principle of their tax-exempt status.” He also emphasized his support for credit union involvement in small business services. DeLay noted that small business in underserved areas can not be measured by standard loan approval models. “And that’s where credit unions come in. Credit unions are unique in that they maintain very personal relations with their members, relationships that allow credit union lenders to look beyond the financials to the intangibles that often result in success,” CU NewsWatch quoted him as saying. “So I think credit union lending to small businesspeople will continue to be a core requirement for economic growth in the United States.” On the Financial Services Regulatory Relief Act (H.R. 1375), DeLay pointed out that the House passed the bill months ago by a 392-25 vote. “It’s an important piece of legislation because it removes several regulatory barriers currently facing financial services companies including credit unions,” he said, adding that he hopes the Senate addresses the bill with the same importance as the House did. “But the Senate moves at its own pace. However, even if we aren’t able to send this bill to the president this year, I fully expect similar legislation to be introduced and more quickly next year,” Delay concluded. The article came about in CUNA’s lobbyists’ work with the House leadership. “He has been helpful to us behind the scenes talking to Chairman Thomas and others.” CUNA Senior Vice president of Governmental Affairs John McKechnie said. In fact, he said, CUNA has “a lot of indications that members of the leadership have, in fact, spoken to Chairman Thomas, which is.one of the reasons, I think, a hearing may not occur this year.” McKechnie explained, “Sometimes in these kinds of legislative situations you try to ask members of Congress not what you want them to do but you’ve got to ask them what do you think would be most helpful to our cause.” DeLay recommended the Q&A in CU NewsWatch. “Specifically, he wanted to get some messages across that allow him to talk not only about credit unions but about how he sees our role in the overall economy, et cetera, et cetera,” McKechnie said. He added, “It’s a very notable milestone in this entire effort by CUNA to try to throw a net around the tax threat and to make sure that even though the banks are raising their voices, even though certain influential members of Congress are evidencing some erosion in their support for the tax exemption, we also have other members of Congress, like Tom Delay.” While not naming names, McKechnie said that some lawmakers seem to be beginning to buy the bankers’ size argument about credit unions. It does not matter much that the bankers do not appear to be gaining much support for taxing credit unions right now, CUNA Vice President of Political Affairs Richard Gose said. “If you look at the banks’ history, they’re in it for the long haul,” he observed. “They’re going to try to get as many people to support their side of the argument as they can. They’ll just keep on keepin’ on until they finally get enough and get the environment right. And with tax legislation and the various bills that come through Congress, this could get weaseled in anywhere and if we have a disproportionate number in leadership who support the bankers’ argument versus ours, it’s just a matter of time.” McKechnie reiterated that these are preventative measures to keep the banks from getting a foothold because credit unions would rather fight taxation before something is introduced in Congress than try to take it out later. “One of the ways that our strategy I think is being successful is that we’ve used the banks’ hostilities to, in fact, highlight some of the support we have on Capitol Hill,” he said. “I hope that the bankers are feeling like their efforts are not taking root and I hope they’re getting discouraged. We’d like to see them discouraged and go back to trying to do a better job of serving their customers and leave credit unions and our members alone.” CUNA Vice President of Communications and Media Outreach Pat Keefe pointed out that the American Bankers Association put out a publication, “The Morphing of Credit Unions,” to lawmakers and press June 25. “They have a lot of money and a lot of venom,” McKechnie commented. [email protected]