CU Alternative Capital Still a Priority with Rep. Sherman; Interested in Seat on Tax-Writing Committee

WASHINGTON – Congressman Brad Sherman (D-Calif.) told attendees of NAFCU’s Congressional Caucus last week that, despite the Government Accountability Office report, he was “not terribly disappointed with the secondary capital study.” Nothing happens in Washington without that first obligatory study, he said. Sherman said it has not undermined his resolve to introduce legislation. “I’ve never heard of an institution that I would say has too much capital,” he said. He pointed out that each credit union has an interest in every other credit union remaining well capitalized. Sherman added, “There are some who say, `Well if we have alternative capital that makes us like the banks. Well, banks don’t have secondary capital. That would be like saying getting a beak would make you more like a dog.” The former CPA and tax attorney also pointed out that the investors purchasing subordinated debt are not looking for voting rights or membership, which is one of the arguments against alternative capital. He conceded that a maturity schedule would need to be decided upon and that marketing would have to make it clear the investments were not insured. Sherman said he would continue to “push forward with it but don’t expect to pass it next year.” The risk-based capital in the Credit Union Regulatory Improvements Act (H.R. 3579), which he has cosponsored, is a necessary first step, he explained. “Before you look at secondary capital, you have to first count the capital,” he stated. Following his address, Sherman made it clear that he was hopeful for a seat on the powerful Ways and Means Committee. “Any overall look at nonprofits will include a review of credit unions and it’s not a bad idea to see if this group is meeting its reason for being tax-exempt,” he said. During his speech, Sherman noted the banks, “For some reason they are on a crusade to have you taxed.” Judging by the banks’ profits, he said, credit unions aren’t doing too much damage to them. He added that non-profits should be judged based on their service to their communities. Sherman also told Caucus attendees that he would likely pick up the bill to allow credit unions to provide check cashing and remittances for all membership, after current sponsor Congressman Doug Ose (R-Calif.) retires at the end of this session. [email protected]