46th legislature - STATE OF NEW MEXICO - first session, 2003

REQUESTING THE BLUE RIBBON TAX REFORM COMMISSION TO REVIEW THE SPECIAL TAX TREATMENT AFFORDED FEDERAL AND STATE CREDIT UNIONS.

WHEREAS, not all credit unions are alike, with one group of credit unions generally adhering to the spirit of the industry's 1934 charter by serving distinct groups of people that are usually based on occupation; and

WHEREAS, a second group of credit unions oversteps the original intent of the credit union charter, allowing, in some cases, hundreds of unrelated groups to belong to the same credit union; and

WHEREAS, the institutions in this second group are professionally staffed, offer product lines virtually identical to banks, operate from large facilities and often have extensive branch networks; and

WHEREAS, these credit unions are active participants in the marketplace, offering real estate loans, consumer loans and even mutual funds; and

WHEREAS, the virtual collapse of the common bond requirements, combined with the offering of a full range of services, makes this second group of credit unions indistinguishable from banks; and

WHEREAS, in 1990, the federal deposit insurance corporation wrote "the U.S. credit union industry has evolved from serving simple, short-term consumer savings and lending needs, to being full-service consumer banks"; and

WHEREAS, the public policy question is whether special treatment, such as a tax subsidy and different regulatory rules, should continue to be afforded to that fast-growing portion of the credit union industry that looks and acts like the banking industry; and

WHEREAS, credit unions that want to act as banks should give up their tax subsidy and should be regulated like banks;

NOW, THEREFORE, BE IT RESOLVED BY THE HOUSE OF REPRESENTATIVES OF THE STATE OF NEW MEXICO that the blue ribbon tax reform commission created by the legislature be respectfully requested to include in its study a review of the special tax treatment afforded to federal and state credit unions and make recommendations, if any, on the continuation of that tax treatment; and

BE IT FURTHER RESOLVED that a copy of this memorial be transmitted to the chair of the blue ribbon tax reform commission.