No shame in the credit union industry’s game. Earlier this week, Jim Nussle, president and CEO of the Credit Union National Association (CUNA), one of the largest industry trade groups, sent a letter to the House Ways and Means Committee expressing the organization’s concern about the effects of a new regulation placed on credit union executive compensation. In an earlier Lobbying Disclosure Act filing from Q4 of 2018, CUNA stated that it will lobby for issues regarding “H.R. 1, the Tax Cuts and Jobs Act…related to executive compensation.” In layman’s terms, CUNA is fighting to undo a new 21 percent excise tax on credit union executive compensation (salaries over $1 million) implemented under the Tax Cuts and Jobs Act.
Other industry trade associations don’t seem to be hiding their lobbying efforts, either (to our surprise). The National Association of Federal Credit Unions (NAFCU) also outlined its government affairs strategies created to attack the issue in this blog post, proving multiple credit union organizations seem to be okay with letting the whole world know that the large credit unions they represent are more concerned with preserving their tax-subsidized executive salaries than with ensuring credit unions are actually serving people of modest means. (They are, after all, fine with using their tax-subsidized lobbying dollars to oppose applying legal requirements that credit unions serve the underserved with the same vigor they’re seeking to avoid paying taxes on high salaries.)
It’s easy to see why the industry trades are pushing back – being CEO of one of these “not-for-profit” entities is a good gig. A CU Times review of CEO compensation at the 55 largest state-chartered credit unions revealed that more than HALF of them could be forced to pay the 21 percent excise tax. And that’s only for state-chartered credit unions! We don’t have similar data for federal credit unions because they aren’t required to disclose it. A neighborhood homeless shelter literally discloses more than a billion dollar federal credit union.
Transparency is good, and I guess we can commend the credit union trades for being transparent on their lobbying strategy; in fact, this may be the first time we’ve seen a lick of transparency from those associated with large credit unions. You see, this new tax actually has the potential to be an effective form of regulation – the next logical step to implement this tax would be to require federal credit unions to file 990s with the IRS, which would be a huge step to fixing the transparency issues within the industry. Of course lobbyists would fight that – they don’t want policymakers to know how those tax-subsidized dollars are being used.
The credit union industry is a nonprofit industry that was created to serve the underserved. Their trade associations should be embarrassed about CEOs of their largest institutions making millions in the first place, as it proves they are using their federal income tax exemption for reasons other than fulfilling an originally noble purpose. The largest credit unions are not only unashamed about the level of executive pay, but they have also made the issue a top priority with the Congress this year – demonstrating yet again how out of touch large credit unions are with their mission, or the needs of the broader credit union industry.
We hope Congress holds large credit unions accountable and refuses to bend on the excise tax decision, no matter how much credit union trade associations cry and complain.