WASHINGTON—The Senate Thursday confirmed Kenneth Kies to be assistant secretary of the Treasury.
The Senate, remaining within party lines, voted 53-45.
Some within credit unions viewed Kies nomination as a setback in the credit union tax fight.
As CUToday.info reported, earlier this year the Defense Credit union Council shared concerns about Kies and his position on CU taxation.
In April, DCUC pointed to Kies’ history of advocating for the repeal of credit unions' tax-exempt status. The trade group then sent a letter to the Senate Finance Committee, urging the group to question Kies on his stance and seek a public commitment that he will not pursue policies that would undermine credit unions' mission.
"Mr. Kies has a well-documented history of advocating for the elimination of credit unions’ tax-exempt status. As co-author of a report, he argued that credit unions ‘no longer have any policy or economic justification’ for exemption and recommended that Congress revoke the exemption to 'level the playing field' with banks,” DCUC wrote.
As CUToday.info reported, just over ten years ago Kies co-authored a seven-page report for Deloitte that advocated the repeal of the federal tax-exempt status for credit unions of all sizes.
Kies, currently managing director of the Federal Policy Group, LLC, has also done consulting work for the American Bankers Association and has been outspoken on his position of favoring taxing credit unions.
The seven-page report, co-authored by Kies and Bert Ely, principal of Ely & Associates, states: “Unlike other financial institutions like banks and thrifts, credit unions do not pay corporate taxes on their income. This puts them at a competitive advantage relative to other financial institutions for tax reasons. Eliminating this exemption would raise revenue and level the playing field."
America's Credit Unions pointed out that during testimony before the Senate Finance Committee in late April, Sen. Ron Wyden (D-OR), asked Kies directly on his past opposition to credit unions’ tax status, to which he responded: “If confirmed, I would focus on promoting a strong financial services sector and a level playing field, while ensuring our tax policy supports access to affordable banking without distorting competition.”
America’s Credit Unions submitted a letter to the Senate Finance Committee in response to Kies’ refusal to walk back previous opposition to the credit union tax status.
In the letter, President/CEO Jim Nussle reiterated the need for the tax status and its impact on credit union operations:
“We believe it is important that key policymakers, like those confirmed to work at the Department of Treasury, also understand that credit unions are not unfairly competing with banks but rather filling a need to serve those banks have left behind in the search for greater profits,” Nussle wrote. “It is a duty credit unions take seriously and do with pride.”
Research conducted by America’s Credit Unions and a recent survey from J.D. Power both highlights the unique focus and impact of credit unions on Main Street.
“When banks hold over 91% of assets, and have since the existence of credit unions, it is impossible to claim that credit unions provide any real competition to banks. Credit unions are integral to strong local economies—their not-for-profit status is proven to make financial services more affordable for all,” said Nussle.
With Kies now officially in office, one credit union analyst pointed out it is likely good for the movement Kies’ confirmation comes after the Senate and House have developed their tax bill language. However, a final budget bill has yet to be passed, as the Senate moves toward a self-imposed July 4 deadline.