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#184582 - 07/01/04 02:49 PM Re: Credit Unions not paying taxes
Anonymous
Unregistered

People that believe Credit Unions are like they were 30 years ago refuse to see the changes that have taken place.
When Credit Unions started their mass crusade to take customers away from local community banks they open this can of worms. Most bankers like credit unions that operate like credit unions. It's when they act like large commercial banks under the disguise of a credit union that ruffles our feathers. There is a huge difference here!

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#184583 - 07/02/04 01:18 AM Re: Credit Unions not paying taxes
HRH Dawnie Offline
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Anchorage Alaska
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#184584 - 07/02/04 05:48 PM Re: Credit Unions not paying taxes
Paragon Offline
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Paragon
Joined: Dec 2003
Posts: 2,164
The cat is gone. As of right now, I have you fishing in Alaska!

I just received a notice from the ABA stating that they sent all banks, members of Congress and selected reporters "The Morphing of Credit Unions," an educational booklet that explains how many credit unions have changed from small organizations providing loans to people of limited means into a new breed of large, complex, tax-advantaged institutions.

According to the ABA, we all should feel free to use parts of the booklet in our letters to and conversations with our senators, representatives and state legislators.

It's all about the Morphing!

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#184585 - 07/02/04 05:54 PM Re: Credit Unions not paying taxes
HRH Dawnie Offline
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Anchorage Alaska
We're very busy with "Operation Credit Union" around here lately If they'd just do what they claim they do...wouldn't it be nice? Ehh well

That could be me fishing But on the other side of me there's a steamy mug of hot buttered rum!
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#184586 - 07/03/04 08:03 PM Re: Credit Unions not paying taxes
pegasis Offline
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Joined: Jan 2004
Posts: 11
What si wrong with credit unions? They provide a better service tahn banks, at lower costs to the customer, and with less motive to soak the consumer.

The growth of CU's is a direct reflection of the treatment of bank customers!

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#184587 - 07/03/04 10:47 PM Re: Credit Unions not paying taxes
twin1 Offline
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Joined: Feb 2003
Posts: 111
Gateway to the South
I have to take issue with you. As a small community bank, we give great customer service. Just ask our customers.
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#184588 - 07/05/04 04:06 AM Re: Credit Unions not paying taxes
Anonymous
Unregistered

Reply to Paqasis:
As a Training Officer for a community bank we give excellent customer service. You are way out in left field with your answers to this thread. Bankers don't dislike small local credit union that operate as as credit union. They offer a service to their customers. We are talking about the Large Commercial Credit Unions that operate and act like a bank and pay no taxes or answer to any Federal regulations. A LEVEL PLAYING FIELD IS ALL WE ASK:

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#184589 - 07/06/04 07:44 PM Re: Credit Unions not paying taxes
HRH Dawnie Offline
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Anchorage Alaska
Read the entire thread before you post Pegasis. We're not against all CU's but some are rediculous. The thread fully covers the issues banks have with huge financial institutions who don't have any where near the same regulatory burden, or tax burden we do.
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#184590 - 07/07/04 04:47 PM Re: Credit Unions not paying taxes
Anonymous
Unregistered

CAN SOMEONE EXPLAIN TO ME WHAT IS MEANT BY A LEVEL PLAYING FIELD?

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#184591 - 07/07/04 07:11 PM Re: Credit Unions not paying taxes
Inquisitor / Sommelier Omega Offline
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Inquisitor / Sommelier Omega
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A Grant Wood painting.
Quote:

CAN SOMEONE EXPLAIN TO ME WHAT IS MEANT BY A LEVEL PLAYING FIELD?




My bank could offer more competitive rates on loans and deposits if not for the need to pay taxes.
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#184592 - 07/08/04 07:57 PM Re: Credit Unions not paying taxes
Anonymous
Unregistered

LEVEL PLAYING FIELD:

Let's say you are on a playground and you and your friend are on a see-saw. You are a bank and your freind is a CU.
In the middle of the see-saw is a box that contains federal taxes and federal regulations. Since the box is in the middle of the see-saw you have a level playing field. Say your friend the CU wants some special treatment say like not paying any federal taxes. The keeper of the see-saw says this is OK. Now your end of the see-saw is on the ground and your friends CU end is way up in the air earning big bucks. THE PLAYING FIELD (SEE-SAW) IS NOT LEVEL ANYMORE!! IS THIS FAIR TO YOUR FRIEND?

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#184593 - 07/08/04 10:12 PM Re: Credit Unions not paying taxes
Anonymous
Unregistered

That reply reminds me of that book I read along time ago called "Everything I need to know I learned in kindergarten!" Great answer...

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#184594 - 07/12/04 04:22 AM Re: Credit Unions not paying taxes
Anonymous
Unregistered

A LEVEL PLAYING FIELD!

ALL BANKS AND CREDIT UNIONS PAYING THEIR FAIR SHARE OF FEDERAL TAXES AND FOLLOWING ALL FEDERAL REGULATIONS!

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#184595 - 07/12/04 05:54 PM Re: Credit Unions not paying taxes
Anonymous
Unregistered

If banks want a level playing field, perhaps as a trade-off for CU taxes they’d be willing for FDIC “insurance” to be as solid as NCUA insurance. The FDIC is backed up ONLY by the full faith and credit of the US Government – which is to say “taxpayers.” In contrast, NCUA-insured CU’s must place 1% of their assets on reserve with the NCUA. This is where the money comes from when, rarely, a CU fails. Can you imaging telling your bank’s CEO to cough-up 1% of the bank’s assets in cold hard cash to protect depositors at other banks? As a practical matter, I don’t believe that anyone has ever lost a cent when a CU fails – even to the point of paying the depositor more than the insured amount. Now, imagine that something causes banks to fail in similar proportions as S&L’s did fifteen years ago. (No? Wait for interest rates to rise – and with them default rates on the most massive real estate refi boom ever). Unlike the NCUA, the FDIC doesn’t have an insurance fund waiting to be tapped to help out. Will Congress be willing to write a check to cover the losses, as they did with S&L’s? I suggest that they won’t - because they can’t. $120 billion is one thing, and so is a few million for the isolated troubled bank – but $1trillion? Or more? You can’t “level the playing field” by addressing the tax issue while ignoring the sinkhole on the bank’s 10-yard line

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#184596 - 07/12/04 06:38 PM Re: Credit Unions not paying taxes
Jokerman Offline
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Quote:

Can you imaging telling your bank’s CEO to cough-up 1% of the bank’s assets in cold hard cash to protect depositors at other banks? ... Unlike the NCUA, the FDIC doesn’t have an insurance fund waiting to be tapped to help out.




Uh, what is the BIF which represents 1.33% of insured deposits???

Better a man remain silent and thought a fool...

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#184597 - 07/12/04 07:00 PM Re: Credit Unions not paying taxes
NotALawyer Offline
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NotALawyer
Joined: Nov 2001
Posts: 455
There are so many factual errors in this post it is difficult to know where to start.

Quote:

If banks want a level playing field, perhaps as a trade-off for CU taxes they’d be willing for FDIC “insurance” to be as solid as NCUA insurance. The FDIC is backed up ONLY by the full faith and credit of the US Government – which is to say “taxpayers.”




That is the FINAL backer, not the ONLY backer. The BIF (bank insurance fund) maintained by the FDIC is the first line. The rest of the insured banks is the second line. The BIF is funded from the insured banks. From NCUA.gov

"The National Credit Union Share Insurance Fund (NCUSIF) is the federal fund created by Congress in 1970 to insure member's deposits in credit unions up to the $100,000 federal limit. Administered by the National Credit Union Administration, the NCUSIF is backed by the "full faith and credit" of the U.S. Government."

Quote:

In contrast, NCUA-insured CU’s must place 1% of their assets on reserve with the NCUA.




That should be 1% of deposits, not assets. Banks are required to pay (not “place on reserve”) between 0%-.27% (quarterly) of deposits to the BIF and an additional annualize 1.54% to FICO (Finance Corporation - not the credit score).

Quote:

This is where the money comes from when, rarely, a CU fails. Can you imaging telling your bank’s CEO to cough-up 1% of the bank’s assets in cold hard cash to protect depositors at other banks?




As addressed above, they already are (but not based on assets).

Quote:

As a practical matter, I don’t believe that anyone has ever lost a cent when a CU fails – even to the point of paying the depositor more than the insured amount.




NCUA.gov link again "Three large New England credit unions failed in 1992 substantially increasing insurance losses." Also, they don’t claim to pay above the insured amount – NCUA.gov clickey again "no member has ever lost money insured by the NCUSIF."

Quote:

Now, imagine that something causes banks to fail in similar proportions as S&L’s did fifteen years ago. (No? Wait for interest rates to rise – and with them default rates on the most massive real estate refi boom ever).




This will impact CU possibly even more than banks if CU loan only to low to moderate income individuals (as has been posited).

Quote:

Unlike the NCUA, the FDIC doesn’t have an insurance fund waiting to be tapped to help out.




Also wrong.

Quote:

Will Congress be willing to write a check to cover the losses, as they did with S&L’s? I suggest that they won’t - because they can’t. $120 billion is one thing, and so is a few million for the isolated troubled bank – but $1trillion? Or more?




Congress is already on the line with CU’s as it is for banks.

Please present facts next time.

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#184598 - 07/12/04 10:32 PM Re: Credit Unions not paying taxes
Andy_Z Offline
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You go NAL! When I heard people talk about the taxpayers bailing out banks, it upset me. I know that the remaining banks often saw the burden. I never did see a breakdown to know how much, if any, came from the government (taxpayers) and if that was short term, or long.
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#184599 - 07/12/04 11:20 PM Re: Credit Unions not paying taxes
Don_Narup Offline

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Las Vegas Nevada
Point of information on Tax Payors participation

In August 1985 the GAO estimated the loss to the FSLIC insurance at 20 Billion Dollars At that time there was only 4.6 Billion in the fund.

In January 1987 the GAO declared the FSLIC fund insolvent.

In August 1987 the Competitive Equity Banking Act was enacted which authorized 10.8 billion dollars in recapitalization of the FSLIC.

In August 1989 the Financial Institutions Reform Act and Enforcement Act (FIRREA) was enacted which abolished the FSLIC and created the Resolution Trust Corp. FIRREA included 50 Billion in new borrowing authority most of which was financed from general revenues.

In 1993 The RTC requested and additional 25 Billion dollars from Congress

A total of 747 institutions were sold or paid off by the RTC. Total asset sales and collections were 302 Billion. The net cost to tax payers as of October 23,1995 was 90.1 Billion Dollars.
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#184600 - 07/13/04 12:29 AM Re: Credit Unions not paying taxes
Don_Narup Offline

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Why Politicians are allowing Credit Union to expand membership. (This was published in at Alanta FRB publication 12/2001)

Membership in federally chartered credit unions is limited by law to “individuals sharing a common bond of occupation, association, or geographic area.” As shown by the large number of credit union failures in the early 1980s, limiting membership to a single common bond tends to create portfolio concentration risks.

The 1998 Credit Union Membership Access Act may mitigate these risks by explicitly allowing credit unions to expand their field of membership to include multiple common bonds called “select employee groups” (SEGs).

It appears the expansion is more about decreasing risk to taxpayers.
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#184601 - 07/13/04 01:14 AM Re: Credit Unions not paying taxes
NotALawyer Offline
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NotALawyer
Joined: Nov 2001
Posts: 455
From an FDIC document from 2000:


The savings and loan crisis of the 1980s and early 1990s produced the greatest collapse of U.S. financial institutions since the Great Depression. Over the 1986–1995 period, 1,043 thrifts with total assets of over $500 billion failed. The large number of failures overwhelmed the resources of the FSLIC, so U.S. taxpayers were required to back up the commitment extended to insured depositors of the failed institutions. As of December 31, 1999, the thrift crisis had cost taxpayers approximately $124 billion and the thrift industry another $29 billion, for an estimated total loss of approximately $153 billion. The losses were higher than those predicted in the late 1980s, when the RTC was established, but below those forecasted during the early to mid-1990s, at the height of the crisis.

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#184602 - 07/13/04 05:45 PM Re: Credit Unions not paying taxes
Tisa Offline
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Tisa
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Quote:

Why Politicians are allowing Credit Union to expand membership. (This was published in at Alanta FRB publication 12/2001)

Membership in federally chartered credit unions is limited by law to “individuals sharing a common bond of occupation, association, or geographic area.” As shown by the large number of credit union failures in the early 1980s, limiting membership to a single common bond tends to create portfolio concentration risks.

The 1998 Credit Union Membership Access Act may mitigate these risks by explicitly allowing credit unions to expand their field of membership to include multiple common bonds called “select employee groups” (SEGs).

It appears the expansion is more about decreasing risk to taxpayers.




My credit union is a prime example of this. Our original "common bond" was a group of silicon valley high-tech companies, some large, some small. Well, we all know what happened a few years ago, when the dot.com bubble burst. Although we were not in imminent danger of folding, we were severely hurt by the practically overnight (poof!) disappearance of nearly half of our member companies.

To survive, we elected to change to a community charter with our county borders as the new "common bond". We still market to the high-tech crowd, but we don't have to turn away someone just because they don't work at one of our specific companies.
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#184603 - 07/13/04 05:55 PM Re: Credit Unions not paying taxes
Paragon Offline
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Paragon
Joined: Dec 2003
Posts: 2,164
You are also the target of the banking world. Send in your taxes.

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#184604 - 07/13/04 06:36 PM Re: Credit Unions not paying taxes
Tisa Offline
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Tisa
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So you would have rather had us fail than do what we had to, to survive?
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#184605 - 07/13/04 07:08 PM Re: Credit Unions not paying taxes
Andy_Z Offline
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I wouldn't like to see any institution fail. But you were established to serve a group with a common bond. Then it is said that isn't enough, lets grow. That is fine, but when your market is identical to the banks, what is the difference that affords you tax exemptions? If your common bond requirement is anyone who can or does bank at the XYZ bank, and some CUs may think that is a valid requirement, what reason do you have to justify the exemption? Your common bond becomes so broad that it does not have the same meaning as when you were chartered.
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#184606 - 07/13/04 07:09 PM Re: Credit Unions not paying taxes
Don_Narup Offline

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I don't think any one wants CU's to fail. What has happened is in solving the "Concentration" risk problem in order to prevent another S&L type disaster, another problem has been created which no one thought about. Thats the unequal competition it creates with the banking industry.

Bankers are saying you want to compete with us fine just do it with the same tax and regulatory burdens we have to contend with.

IMO the problem is still political as if changes were made to equalize CU's and Banks there would be a number of CU's having to close or sell out. Thats politically incorrect so right now the politico's have there heads in the sand as there is not an acceptable political solution. In the past 5 years a little over 20 CU's have failed each year. Raising that to 100 or more like in 1990 just will not fly politically.

Unfortunately, The SEG regulation has done away with the notion that CU's serve a particular clientel. So, the original purpose of CU's is no longer valid. CU's are the ones on a different playing field. Their field has been allowed to overlap on everyone elses but other institutions can't play on theirs. Thats not a fair ball game.

There is great fear of having another S&L type disaster. So we have the CU risk spread around better which will keep some in business if sectors of the economy go in the dumper (per the illustration given by Tisa) but no solution to the unequal playing field this SEG regulation has created. Politically, our representatives just don't care about the unequal playing field just as long as no one can point the finger at one of them or an administration that causes a rash of CU failures due to legislation they propose to " Help the Big Bad Banks"
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