Mica 'Outraged' Bankers More Interested in CU Tax Than Fighting Terrorism, Backing Ethical Conduct
Calls on Congress to tell ABA to stop whining, get off CUs' backs

April 1, 2004

FOR IMMEDIATE RELEASE
Contact:
Patrick Keefe, CUNA Communications
(202) 508-6765
pkeefe@cuna.com

WASHINGTON -- Who would rank "credit union taxation" as a "superpriority" over such vital national issues as terrorism, accurate accounting and ethical corporate governance?

None other than the American Bankers Association.

And that has CUNA President and CEO Dan Mica outraged.

As a result, Mica has asked Congress to tell the bankers' group to stop its whining and get off the backs of America's credit union members.

"When the bankers' 'Government Relations Priorities for 2004' came to my attention around the first of the month, I thought it was some sort of April Fool's prank," Mica said. "My staff quickly assured me it was no joke. From that point on, the list burned in my hands."

The ABA's priority list for 2004 describes three levels of concern for the group: super priorities, priorities and "other issues to emphasize." The three super priorities are: defending the Gramm-Leach-Bliley law (the banking industry's regulatory relief act); addressing FDIC issues (such as comprehensive reform of deposit insurance); and, rounding out the list, credit unions (particularly, opposing credit union efforts to "expand unfairly" and supporting taxation of expansionist credit unions.")

Beneath these are the priorities, the ABA lists (among others) "fighting terrorism" (working with law enforcement to fight terrorists' money laundering efforts); and "accounting and corporate governance" (supporting ethical corporate conduct and accurate accounting).

Mica told Congress that, in essence, the bankers' group is saying taxing credit unions is more important than protecting the financial system from exploitation by terrorists, mandating ethical corporate behavior to prevent another Worldcom-like implosion, and ensuring accurate accounting to thwart future Enron debacles. He added that the bankers' skewed perspective is just one more reason why Members of Congress must tell the banks to stop their whining, get off the backs of America's credit union members, and get on with the business of serving the nation's commerce and economy.

"This priority ranking is completely outrageous," Mica said, "and is out of touch with the gravity of the real challenges facing our financial system and our nation. At a hearing only yesterday in the Senate Banking Committee, the importance of keeping our banking system safe from terrorist activity was forcefully underscored. For a national trade group which represents institutions that depend on the public's trust and confidence, this action must raise red flags as to their ability to properly evaluate and advocate public policy issues."

The CUNA president made the comments in a letter sent to all members of Congress today (text attached).

With its network of affiliated state credit union leagues, Credit Union National Association serves 90% of America's nearly 10,000 credit unions, which are owned by more than 84 million consumer members. Credit unions are not-for-profit cooperatives where people are worth more than money. For more information, visit www.cuna.org.

(TEXT OF DAN MICA'S LETTER TO EVERY MEMBER OF CONGRESS: )

April 21, 2004

Dear Senator/Representative:

I am always disappointed when an organization that is respected on the Hill gets off track and does something that is completely outrageous. That's why I was astonished to learn that the American Bankers Association lists "taxing credit unions" as a "superpriority" over such other vital national issues as fighting terrorism, supporting ethical corporate conduct and ensuring accurate accounting.

The bankers outline this fantastical perspective in their "Government Relations Priorities for 2004," which recently came to my attention (and is attached). Frankly, when I reviewed a copy of this list at the first of the month, I thought it was some sort of April Fool's prank. My staff quickly assured me it was no joke; from that point on, this list burned in my hands.

In essence, the bankers are saying that taxing not-for-profit, volunteer-led credit unions which serve 85 million consumers is MORE IMPORANT than protecting the financial system from exploitation by terrorists, mandating ethical corporate behavior to prevent another Worldcom implosion, and ensuring accurate accounting to thwart an Enron-like debacle.

This priority ranking is completely out of touch with the gravity of the real challenges facing our financial system and our nation. At a hearing only yesterday in the Senate Banking Committee the importance of keeping our banking system safe from terrorist activity was forcefully underscored. Further, for a national trade group, which represents institutions that depend on the public's trust and confidence, this action must raise red flags as to the ABA's ability to properly evaluate and advocate public policy issues.

Perhaps the real lesson to be learned is that the ABA is having trouble convincing anyone to think seriously that banks, on the heels of posting record profits of $120.6 billion (their most profitable year ever) face a true challenge from the nation's credit unions. Further, as the assets of the entire credit union movement are less than one-tenth of total bank and thrift assets (that is, $629 billion for credit unions and $9.1 trillion for banks), it is difficult to see how - let alone why - credit unions present any sort of competitive challenge to banks.

The ABA's ranking of its superpriorities and priorities, placing credit union taxation so high is just one more reason why you must tell the banks to stop their whining, get off the backs of America's credit union members, and get on with the business of serving the nation's commerce and economy.

Thank you for considering these views. Please, please tell the bankers to rearrange their priorities into proper and realistic perspective, and to leave credit unions and their members alone.

Sincerely,

Daniel A. Mica
CUNA President and CEO
Washington, DC

TEXT OF ABA GOVERNMENT RELATIONS PRIORITIES FOR 2004
(Please e-mail if you want an original copy)

SUPER PRIORITIES

• Defend Gramm-Leach-Bliley - protecting the product and service authorities in Gramm-Leach- Bliley by supporting the Fed/Treasury proposal on real estate brokerage and property management.

• FDIC issues - promoting comprehensive reform; however, any reform legislation should not include increased premium costs.

• CREDIT UNIONS - opposing credit union efforts to expand unfairly and supporting taxation of expansionist credit unions; at the same time, supporting efforts to make banks more competitive, including tax incentives for banks.

PRIORITIES

• Fighting terrorism - working with law enforcement authorities, the Administration, and Congress to effectively fight terrorism through anti-money laundering efforts and other methods; ensuring new regulations are effective and do not impose unnecessary costs or liabilities.

• Accounting and corporate governance - supporting ethical corporate conduct and accurate accounting, while working - particularly with FASB, the SEC, and bank regulators - to ensure that new accounting, compensation, and corporate governance rules do not impose unnecessary regulatory or competitive costs.

• Enacting meaningful bankruptcy reform.

• Agriculture and rural development - supporting rural development initiatives; opposing u unfair competition by the Farm Credit System; and supporting tax proposals that would encourage lending in rural areas by FDIC-insured banks.

• Enacting legislation permitting daily transfers to and from corporate demand deposits.

• Banking and commerce - opposing efforts that would permit the mixing of banking and commerce, including expansion of industrial loan companies owned by commercial firms.

• Privacy - leadership in keeping the trust of bank customers; enacting national uniform standards; promoting identity theft education; opposing onerous state and federal legislation.

• Supporting legal and tort reform.

• Government Sponsored Enterprises (GSEs) - working to ensure that there is a GSE regulatory structure that supports appropriate GSE activities, but ensures safety and soundness of the GSEs and limits activities that unfairly compete with banks.

• Law enforcement - strengthening the resources devoted to fighting fraud, identity theft, and bank robberies.

• Tax reform - concentrating on recommendations of ABA's special task force report "Blueprint for Reform," including Subchapter S liberalization and tax-favored accounts.

• Predatory lending - working to end unfair and deceptive practices by, among other activities, demonstrating industry leadership on consumer education, and preventing, and possibly preempting, harmful state and local laws that would undermine credit availability to low- and moderate-income consumers.

• Basel accords - achieving workable capital rules from the current proposal.

• Supporting enactment of a federal insurance charter to create a dual insurance charter system.

• Mutual charter - supporting the mutual and mutual holding company options through active participation with the banking agencies to achieve more flexible and tailored rulemaking and supervisory guidance for mutual charters.

OTHER ISSUES FOR ABA TO EMPHASIZE

• Working to strengthen the industry's political capabilities through TEAM 21 and BankPac.

• Supporting legislation granting the Federal Reserve the authority to pay interest on reserves.

• Small Business Association (SBA) issues - supporting adequate funding for SBA, while working to address specific problems in SBA programs; continuing objections to expansion of SBA usage by credit unions.

Approved by the ABA Board of Directors, December 2003

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