... just asking for it?
[Out of control wildfire reported in "Comments"! Use caution.]
From the CUTimes [1/3/2025]: "WASHINGTON—President Trump’s announcement of Ken Kies as assistant Treasury secretary for tax policy should draw the attention of credit union trade groups, analysts are saying." Kies has long held: " Unlike other financial institutions like banks and thrifts, credit unions do not pay corporate taxes on their income. Credit unions have evolved to become large financial institutions which provide services that are identical to their taxpaying competitors. In order to level the competitive playing field in the banking industry, all credit unions should pay corporate income taxes.”
The banking industry has long objected to the corporate tax exemption for credit unions. Certainly begins to sound reasonable if credit unions have in fact "evolved to become large financial institutions which provide services that are identical...". But SECU, in its operations, purpose and mission, has long adhered to the traditional credit union model - particularly a limited field of membership; the avoidance of commercial/business lending and mergers; a focus on serving all members (even of "modest means") equitably; and staying true to its not-for-profit structure. Until 2021`... when the "new/new" arrived.
If SECU is operated responsibly, on a true not-for-profit basis; the tax exemption may not make much difference. Why? Because all "profits" are returned to the members through better rates on savings; and, members pay the state and federal income taxes on those interest earnings - same as the banking industry.
But when bankers and government officials see SECU pushing open membership, growth-for-growth's sake, risk-based and business/commercial lending... support can quickly wane.
Then, to make matters worse, our adversaries listen to SECU brashly brag and boast about having "the most profitable year ever" in 2023, when $587 million in earnings - not needed to maintain strong, statutory reserve requirements - were withheld and not paid out to the membership.
Let's see what the corporate tax bill could have been on $587 million in "excess profits". The federal tax rate is @21%, the State tax rate @5%. A combined tax rate of 26% would have cost SECU members - that means you and me - $152 million ($587 mil. x 26%).
Is the SECU Board aware of the substantial risks it is taking? Unforced strategic errors can be costly to the member-owners...
... is this covered in our "Strategic Plan"?
