However, even though Simpson is confident the industry will successfully address Hatch's concerns and noted the senator has been a long-time defender of the tax exemption, he is uncertain which side Hatch will inevitably land on this issue.

“There is a powerful force in play here and he doesn't have the political pressure he had over the last 42 years,” Simpson said. “I think it is a little more challenging to predict because there is a freedom that comes as an elected official when you are not dependent on the electorate. But again, I am leaning on the 42 years he has been supportive [of the tax exemption].”

Hatch wrote in a Jan. 31 letter to the NCUA that many credit unions are straying from their original tax-exempt purpose, and he listed seven questions for the federal agency to answer. Interestingly enough, the influential Tax Foundation on Jan. 30 announced its support for Congress to re-examine “the extent to which credit unions currently fulfill their [tax-exempt] original purpose.” And outside of the Washington beltway, Iowa bankers pledged a full-court press with the launch of a digital, radio and television ad campaign targeting the credit union tax status.

Over the years, there have been scores of challenges and criticisms about the credit union tax exemption. But are they seemingly different this time, particularly when you consider that a longstanding supporter of the tax exemption is now questioning it?

“I am concerned that the credit union industry is evolving in ways that take many credit unions further from their original tax-exempt purpose,” Hatch wrote in his letter. “Recent actions by the National Credit Union Administration (NCUA) have further relaxed field of membership constraints, opened the door to the use of alternative capital, and lifted limits on other activity such as business lending, which has traditionally been less associated with the mission of tax-exempt credit unions. While these may be worthwhile pursuits, they should give us pause and cause a reflection on the core mission of credit unions and their tax-exempt purpose.”

Ryan Donovan, CUNA's chief advocacy officer, acknowledged CUNA did not expect Hatch's letter, but said the organization was not unsettled by it because Hatch, who chairs the powerful Senate Finance Committee, is simply carrying out its oversight responsibilities.

“I think it caught us off guard to the extent that we were not aware it was going on before [Hatch's letter] went [public],” Donovan said. “The Finance Committee, in recent years, has asked similar inquiries of other tax exempt entities. I think we're grateful that this has come after the grand debate on tax reform [H.R. 1], but these are questions that I think the NCUA and the credit union system have strong answers to, so I'm not sure that it unnerved us.”

Brad Thaler, vice president of legislative affairs at NAFCU, didn't seem to be all that phased as well, even though NAFCU mailed a letter to Hatch, as did CUNA, addressing the senator's concerns soon after they were made public.

The fact that the credit union tax exemption survived last year's tax reform bill and Hatch waited to write this letter after the bill passed indicated to Thaler that Hatch still supports the tax exemption.

“Because he asked oversight questions in the letter doesn't necessarily mean that he's changed his position,” he said.

John Fairbanks, an NCUA spokesperson, said the federal agency is working on a response letter, which must be submitted by the finance committee's deadline of April 6.

An analysis posted by the California and Nevada Credit Union Leagues agreed that under Hatch's purview, the credit union tax status wasn't even discussed during the consideration of H.R. 1. However, this was only a partial reason for Hatch's “letter and its timing.”

“With the likelihood of a technical-corrections bill coming to H.R. 1, the credit union tax status is a probable target as an offset, especially as the nation's annual budget deficit surpasses $1 trillion,” according to the league.

The league's analysis pointed out “there are other reasons to suspect why Hatch made this request of the NCUA.” Although it didn't specify what those reasons are, it is clear that the usual suspects are the bankers.

A. Scott Anderson, president/CEO of the $65 billion Zions Bank in Salt Lake City, is the chair for the Orrin G. Hatch Foundation as CU Times columnist David Baumann revealed last week. The foundation plans to develop a Hatch Center at a yet-to-be announced university in Utah.

“Now, the Hatch Foundation is not accepting any government money, so it's raising money from the private sector,” Baumann wrote. “And the center's fundraising efforts have been criticized, as foundation officials are attempting to raise money from groups with legislative issues before Hatch's committee.”

The Hatch Foundation, established in 2015 with zero revenue, has already raised nearly $6 million, according to its 2016 IRS 990 Form. The individual contributors are not listed on the document.

In 2015, Anderson, a credit union critic, wrote a letter to CUNA that raised “significant concerns” about the NCUA's plan to expand business lending. Hatch also raised concerns about credit union business lending in his letter.

Hatch's staff said there is no connection between the finance committee and the foundation.

However, the credit union industry should be concerned because in the past, Hatch, like many elected officials, has not been shy about authoring legislation that takes care of his friends and family.

When he announced his retirement in January, the Los Angeles Times noted that throughout his four-decade tenure, he has proven to be a “master of the down-is-up, wrong-is-right method of obfuscating his favors to rich patrons,” according to the newspaper.

For example, Hatch introduced the Dietary Supplement Health and Education Act of 1994, which eliminated government regulation of the highly dubious health claims of dietary and herbal supplements unless the Food and Drug Administration learns of health or safety problems with products after the fact.

The New York Times reported the Hatch act made many of his closest associates and family members wealthy. Moreover, the dietary and herbal supplement industry is one of Utah's largest.

The logical question now becomes whether Anderson's relationship with Hatch will influence the senator's decision to offer the $2.9 billion credit union tax exemption as an offset when congressional leaders discuss technical correction proposals for H.R. 1.

The seven oversight questions that Hatch listed in his letter included how the NCUA examines associations as part of a credit union's field of membership, whether the federal agency retains data on how many associational and community charters have been rejected, and what the NCUA policies are when credit unions offer services outside their tax-exempt purpose. Hatch also asked what information the federal agency collects on executive compensation, how the federal agency has considered the issue of public disclosures of executive compensation, and what policies the NCUA enforces regarding marketing expenditures such as corporate sponsorships.

“What concerns me, and what I think as a system we need to continue talking to Congress about, is this notion that because we've grown, that somehow that means we're not fulfilling that mission, or that our structure has changed,” Donovan said. “The ability to do business lending is being confused with maybe not fulfilling our charter. That just doesn't jibe for me. It doesn't make any sense because policy makers should want a credit union system that is out there serving the community, folks with modest means and all credit union members, and certainly that also means small businesses in the community.”

Thaler noted when concerns are raised, the credit union industry must be prepared to explain why the tax exemption enables credit unions to deliver value to more than 100 million members.