News Flash– Washington Working!

July 28, 2022 at 9:54 am Leave a comment

Nothing focuses the mind like fear, and it appears that as Democrats look over the horizon at an election contested against the backdrop of runaway inflation and an increasingly likely recession (the 70s are calling) and some Republicans wanting to campaign on more than conspiracy theories and hot-button social issues, DC is finding a way to break through some of the roadblocks that have all but paralyzed Congress in recent years.  Here’s some initial thoughts for credit unions on some of the latest developments. 

Yesterday, Senator Joe Manchin of West Virginia and New York’s Chuck Schumer announced that they had reached an agreement on a package of budget measures which would, among other things implement major corporate tax reform.  If this comes to fruition, this is almost as big an announcement as Ben Affleck and Jennifer Lopez getting married in Vegas after their long and sometimes tumultuous courtship.  Under the plan, for-profit corporations with one billion dollars or more in profits for three consecutive years will have to pay a minimum tax of 15%.

Don’t get me wrong, this has nothing to do with credit unions and if all goes according to the plan, it won’t.  But whenever Washington starts taking about major tax reform and deficit reduction, it’s time to sharpen our talking points lest because you can bet banking lobbyist are already suggesting how Congress can save even more money.  Afterall, longtime credit union lobbyists remember how Congress seriously considered doing away with the tax exemption as part of the 1986 tax reform measure.

Incidentally, the minimum corporate tax would also not apply to C-corporations which are a way for some banks to avoid paying corporate level taxes.  Instead, taxes are paid by individual shareholders.

Also yesterday, the House Financial Services Committee marked-up New York Congresswoman Maloney’s erstwhile proposal to limit overdraft fees.  According to the American Banker, the debate was a lively one with Republicans sharply critical of the proposal.  The debate comes at a time when overdraft practices are being scrutinized by New York’s Department of Financial Services and court ordered Congressional lines have placed the Congresswoman in the middle of a primary election which reminds me of one of those college parties which get out of control because too many people just assume they’re invited.

Last, but not least, explaining that it was “highly attentive” to inflation risks and “strongly committed” to taming the beast, the Fed announced that it was raising the Fed Fund rates by another 75 basis points marking its continued effort to close the barn door on inflation long after the horse has gotten away.  The wunderkinds of Wall Street responded to the news by sending the Dow Jones industrial average up more than 400 points.  While this is good news for my retirement fund, they might want to look back at history: the Fed has never been able to tame this level of inflation without triggering a recession, a recession that will take place as more and more smaller credit unions are merging out of existence. 

On that happy note, enjoy the rest of your day.

Entry filed under: Advocacy, Economy, Federal Legislation, New York State, Political. Tags: , , , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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