Congress should tighten credit union field of membership requirements before increasing the industry’s Member Business Lending cap, the National Taxpayers Union said Thursday.
“Many large credit unions have strayed from their limited mission and extended their services to nearly anyone,” the NTU said in a letter to committees with credit union oversight powers. “Congress should work to reestablish and clarify sensible common-bond requirements that are a condition of credit unions’ unique status.”
The group reiterated its long-held position that the tax-exempt status of credit unions gives them an unfair advantage. Congress has shown no interest in the past to making the changes being pushed by the NTU.
In a letter written by Thomas Aiello, the group’s policy and government affairs manager, the NTU argued that Congress should take several other steps before allowing an increase in the MBL cap. The NTU is a conservative group that says it is “pro-taxpayer.”
Credit union trade groups and members of the National Credit Union Administration board have said that Congress should increase the MBL cap to allow credit unions to make more loans to businesses affected by the coronavirus crisis. Banking trade groups have opposed those efforts, saying that tax-exempt credit unions should not be allowed to make large numbers of business loans if they are to retain their tax-exempt status.
In the letter, Aiello lists several other conditions that the NTU believes Congress should require before increasing the MBL cap. The NTU called on Congress to:
- Require all credit unions to file IRS Form 990, which lists tax-exempt organizations’ expenses, including salaries of officers. The NTU noted that state-chartered credit unions already are required to file that form.
- Consider whether business lending should be subject to the Unrelated Business Income Tax.
- “Level the playing field” so that all entities are taxed equally when credit unions purchase banks.