KEY WEST, Fla.–Any expectations credit unions might have for some big legislative victories in the current Congress were tamped down in remarks before executives gathered here.
Dan Berger, CEO of NAFCU, told the association’s CEO & Senior Executives Conference that it’s “going to be a very quiet legislation session in terms of some of the things we want to get accomplished.”
The reason is no secret: There’s a Democratic House, a Republican Senate and a very divided Washington. While credit unions are seeking to move bills forward on data security and the member business lending cap, Berger told the meeting, “This is one of the most difficult political environments I’ve ever operated in.”
Credit unions shouldn’t expect any relief anytime soon, Berger added, saying Democrats will be “just pounding on President Trump” over the next two years as the presidential election approaches.
Other Issues Raised
Among other issues touched on by Berger in opening remarks to the meeting:
- With the bankers’ ongoing focus on the credit union tax exemption, Berger pointed to recent reports that more than 60 large U.S. companies pay no taxes at all, including Amazon, which reported $11.2 billion in net income in 2018. “Our tax exemption is worth $1.8 billion, $1.9 billion a year,” said Berger. “I’ve got some other companies they can go after; other companies that are not necessarily contributing to their communities.” Berger noted many community banks are also organized as Subchapter S, meaning they pay no income taxes.
- Berger noted the biggest banks in the U.S. continue to push to eliminate Fannie Mae and Freddie Mac “so they can control the entire mortgage pipeline. The problem with it is in down cycles community banks and credit unions will have no place to move loans. So, we need full access to a secondary market. We don’t care what it looks like.” That secondary market must continue to exist to provide credit unions with options for interest rate risk management and liquidity, he said. “Second, we want to ensure you have fair pricing for your paper. We want to make sure you’re A paper compared to their C paper is getting fair pricing across the board.”
- In terms of the economy, Berger cautioned credit unions to keep an eye on corporate debt in the U.S. and globally. “They went out and got a lot of cheap money and this is coming due in the fourth quarter and 2020,” said Berger. “And in a rising rate environment, you can do the math. If we go into the recession, a lot are going to have trouble paying it back. A lot of it is BBB and will fall into junk status fast.”
- In an online poll of attendees at the meeting, staffing was identified as the most pressing issue facing credit unions. See how attendees voted, below.