The proposal to expand Internal Revenue Service (IRS) reporting requirements for financial institutions is a damaging, unprecedented, and severely flawed public policy, Desert Valleys CU President/CEO Eric Bruen told members of Congress Thursday. House Minority Leader Kevin McCarthy (R-Calif.) hosted a live roundtable to share numerous Congressional and consumer concerns with the proposal.
“Look at what this could do in the long run. Individuals are already beginning to withdraw savings from our credit union. We don’t want to go back to the cash-under-the-mattress approach,” Bruen said. “We obviously could see potential liquidity issues, affecting our ability to lend to the community. We’ve been doing everything in our power legislatively and advocacy-wise to ensure the underbanked are brought into the safety and security provided by an insured depository institution
Bruen added that the proposal also brings many questions about what is exempted from reporting,
“It’s on us as financial institution to deliver this information on a form designed to report $10 or more of interest in a calendar year, not to track cash flow, gross deposits, and gross withdrawals,” he said.
Several members of Congress who attended the roundtable brought up similar concerns from constituents. Rep. Tom Emmer (R-Minn.) read a letter sent by Red Wing CU President/CEO Aaron DeJong about members concerned about the impact.
“Personal and business finances are very private matters to our members, and our credit union has worked hard to be their trusted partner and advisor,” DeJong wrote. “We have heard from other members that if this proposal becomes law—which we would be compelled to follow—they will close their financial accounts.”
DeJong also said the increased reporting would mean increased burdens as costs and resources would be needed to develop and upgrade systems to collect the newly required information.
Also at the roundtable were Reps. Drew Ferguson (R-Ga.), Ashley Hinson (R-Iowa), Andrew Clyde (R-Ga.), and Mike Kelly (R-Pa.). Ferguson and Hinson have introduced legislation to prohibit implementation of the increased reporting requirements.
21 Democrats also called for the proposal to be withdrawn in a letter sent Wednesday evening.
See below for clips of credit unions highlighted during the roundtable.