Questioning of Johnson not routine

WASHINGTON (11/4/05)—Testimony during a House Ways and Means Committee hearing examining the tax status of credit unions was fairly predictable, but Chairman Bill Thomas' grilling of National Credit Union Administration Chairman JoAnn Johnson could not be called routine.

Hammering on a theme of transparency and accountability, Thomas said credit union services are going in "new and novel" directions, and increased documentation and reporting could be seen "as an early warning system" so new practices don't "come back and bite you."

During a break in questioning of the first panel, (from left) NCUA General Counsel Bob Fenner, CUNA Governmental Affairs Senior Vice President John McKechnie, NCUA Executive Director Len Skiles and NCUA Board Chairman JoAnn Johnson. During testimony, Johnson pointed out that taxation would threaten to diminish the sole source of capital for credit unions and cause other adverse changes to the overall credit union system. (Photo provided by CUNA)

Echoing a phrase sometimes used by the banking industry against the NCUA, the California Republican said to Johnson "cheerleading" probably won't serve the movement as well as would " a careful look."

Thomas, who at the end of the almost-six-hour-long hearing said he had no intention of adding taxes to credit unions, advocated that credit unions be brought under requirements like those in the Community Reinvestment Act to demonstrate that credit unions are serving a public good.

He said it was not enough for NCUA Chairman Johnson to issue assurances such as, "I have no doubt the benefit is far greater than what revoking the tax exemption could bring in."

After the committee chairman's questions, Johnson said she realizes documentation "is an issue." She said her agency has met with the Government Accountability Office about its recommendations for increased information gathering and dissemination.

In her written and oral testimony, Johnson said that recent information gathered by the NCUA in quarterly call reports showed average and median share deposit and loan balances in the credit union system demonstrate credit unions are serving members who hold low share deposit and loan balances.

"Of greater significance is the comparison of average and median share deposit and loan balances between low-income designated credit unions and the total population of federally insured credit unions.

"In general," Chairman Johnson stated in her testimony, "average and median balances in federally insured credit unions mirror those in low-income designated credit union."

She added that Home Mortgage Disclosure Act (HMDA) data shows continued focus of credit unions on making credit available to borrowers o low and moderate means.

Related stories: 2005 Hearing on CU Taxation