March 19, 2007


  • As you point out, the percent of non-interest income that will be eligible for taxation is small, but any taxation may be the start of the proverbial "slippery slope" and open the door for more banker attacks.
  • Great summary
  • Any challenge to the income generating resources of a credit union, such as taxation or incented redistribution via social engineering, is an attack on the protective layer of capital of that credit union, which is a direct threat to the Federal sufficiency of the Deposit Insurance Fund. I recall a few decades ago that the FHLB with its FSLIC went to great lengths to redefine, and thereby strengthen, the capital of S&Ls for just that same purpose. Disintermediation through newly allowed brokered deposits, spawned by excessive insurance, and the respondive high risk lending took them to the edge, and many went over . Let''s not make the same mistake again. Don''t put Credit Unions at risk for petty social gains.
    Jim Nichols - Sunnyvale, CA