WASHINGTON—Two credit union trade associations have responded with messages and letters to Capitol Hill in the wake of rumors that a second reconciliation package is being considered, with CU concerns over the potential language related to the credit union tax exemption could be considered.
In response, America’s Credit Unions President and CEO Scott Simpson has sent a message to CUs in which he said, “Rest assured, America’s Credit Unions and the League System are vigilant against these threats.
“However, the path to another budget reconciliation is difficult. It is unlikely that the House has the votes to advance a bill, despite Speaker Mike Johnson indicating he’d like to move a package; House Ways and Means Committee Chairman Jason Smith has said there’s limited support to do so. President Trump also recently told members of the press that it was unlikely to happen,” Simpson said. “Last year, Republicans had expiring tax cuts to hold them together with a common goal, which we do not face this year. And prior to a reconciliation bill, Congress must pass a budget resolution, meaning we will have advance notice of any potential tax legislation.”
‘Political Machinery’
Simpson said credit unions have been successful in preserving the tax status to date due to a being “unified” and because they “put our political machinery into action. Credit unions, leagues, and America’s Credit Unions are relentless advocates.”
The message was shared during the same week thousands of credit union representatives met with their representatives as part of the trade group’s Governmental Affairs Conference (GAC).
Defense Council Sends Letter
Separately, the Defense Credit Union Council (DCUC) has sent letters to House Speaker Mike Johnson (R-LA), House Minority Leader Hakeem Jeffrie (D-MD), Senate Majority Leader John Thune (R-SD), and Senate Minority Leader Schumer (D-NY) urging Congress to preserve credit unions’ tax-exempt status as lawmakers prepare to consider upcoming budget reconciliation legislation.
DCUC indicated it believes Congress is expected to take up another budget reconciliation bill in the near future. DCUC is urging congressional leaders to ensure that this and any future legislation protects credit unions’ longstanding federal tax exemption and maintains their appropriate regulatory framework.
“Credit unions’ unique cooperative structure and record of service to military communities warrant continued protection from harmful tax or regulatory changes,” DCUC President/CEO Anthony Hernandez, said in a statement.
‘Substantial Public Benefits’
Added Jason Stverak, DCUC’s chief advocacy officer, said in a statement, “Congress reaffirmed the importance of this model in 1998 through the Credit Union Membership Access Act, and this policy continues to reflect the substantial public benefits credit unions provide to communities nationwide. Eliminating or weakening the credit union tax exemption would harm millions of Americans who rely on these institutions for accessible financial services.”
DCUC said it has repeatedly warned that revoking credit unions’ tax exemption would result in higher borrowing costs, lower savings returns, and reduced services for members.
‘Particularly Concerning’
“This is particularly concerning when thinking of our junior enlisted personnel and military families on tight budgets. It could also force some on-base credit union branches to close, leaving servicemembers with fewer safe financial options and increasing reliance on predatory lenders,” Hernandez stressed in a statement. “Credit unions’ ability to provide financial education and tailored services that strengthen military financial readiness would be greatly diminished.”
‘Maintain the Regulatory Framework’
In the letter, DCUC urged Congress to maintain the regulatory framework that recognizes credit unions’ cooperative structure.
“Proposals such as interchange or interest-rate caps, or bank-like capital and reporting requirements, could unintentionally restrict credit availability and divert resources away from member services such as fraud protection, financial counseling, and rewards programs,” Stverak said in a statement.
