Credit Unions to Get Once-Over by House

American Banker Wednesday, March 3, 2004 - By Barbara A. Rehm

House Ways and Means Committee Chairman Bill Thomas on Tuesday announced plans to take a broad look at tax-exempt entities, including credit unions.

Though credit unions started out serving relatively narrow groups of people, membership today is much less restrictive, the California Republican said.

" Now the only rationale to belong is that you are warm and sometimes vertical," Rep. Thomas said. The logic behind excusing credit unions from paying taxes "has gotten at least murky, if not lost."

As the country faces a gaping budget deficit, Rep. Thomas said he planned to study the issue of nonprofits competing with companies that pay taxes and said he might hold hearings on the issue. His remarks, mainly directed at not-for-profit hospitals, were made at a meeting sponsored by the Federation of American Hospitals.

Representatives of the banking and credit union trade groups had predictably opposite reactions to Rep. Thomas's speech.

" This issue still has a long way to go, but it is really critical to have a key leader, knowing that they are going to take some flak, be willing to speak out on it," said Edward L. Yingling, the executive director of the American Bankers Association.

" We are disappointed that the chairman would choose to want to air the issue, especially with such negative rhetoric so soon," said John McKechnie, the senior vice president of government affairs at the Credit Union National Association. "This is less than six years after Congress over-whelmingly approved our tax-exempt status."