GAC: Sherman remains committed to CUs

March 10, 2015

WASHINGTON (3/11/15)--As co-sponsor of H.R. 989, a CUNA-supported bill that would allow credit unions to raise other forms of capital, Rep. Brad Sherman's credit union credentials were firmly established before he took the CUNA Governmental Affairs Conference stage Tuesday. But Sherman (D-Calif.) left no doubt in audience members' minds that he will offer credit unions a friendly ear.

Click to view larger imageRep. Brad Sherman (D-Calif.) is a co-sponsor of H.R. 989, a CUNA-backed bill that would allow credit unions to raise other forms of capital. (CUNA Photo)

Issues for which Sherman pledged his support include:

  • Credit union tax status. While banks insist on calling the credit union tax status a loophole, Sherman said loopholes are designed to circumvent prescribed tax legislation for unintended purposes. "Your tax [status] is … there in the code, deliberately and for a reason, and we're going to keep it there," he said. "When you charge less on a mortgage, when you pay a higher rate on a CD, and you can do that only because of your tax status and because you're member-owned."
  • upplemental capital. "Who wouldn't want our financial institutions to be better capitalized?" Sherman said. Under H.R. 989, capital would be required to be uninsured and subordinate to other claims against a credit union. The National Credit Union Administration board would also be allowed to set maturity limits on supplemental capital, and restrict the ability to raise such capital to credit unions that are sufficiently capitalized and well managed. CUNA strongly supports the bill.
  • Member business lending. Sherman said more supplemental capital will allow credit unions to "do the job America needs you to do"--make more member business loans. That's why Sherman said the pledged his support for the recently reintroduced Credit Union Small Business Jobs Creation Act (H.R. 1188) last week, which would raise the cap on credit union member business lending to 27.5% of assets up from the current 12.25%, as long as certain conditions are met.
  • Data security. Retailers should be responsible for their lack of vigilance in securing personal data, Sherman said, adding, "I look forward to working with you and others that those who fail to guard the data are on the hook for costs caused by that lack of vigilance."