Notes, news and views on community banking

Northwestern Financial Review, Mar 15-Mar 31, 2005

Tax Foundation takes shot at credit union tax exemption

A new study from the Tax Foundation examines the federal income tax exemption enjoyed by credit unions, finding it to be a large, unjustified loss to the Treasury: $31.3 billion over the 10-year period of 2004 to 2013.

"The U.S. corporate tax rate is one of the highest in the world, and it could be lowered to good effect if some unjustified exemptions were eliminated," said Scott Hodge, president of the Tax Foundation, which is based in Washington, D.C.

"Credit unions were granted a tax exemption almost 70 years ago so that they could serve low-income people who had little access to financial services," Hodge pointed out. "Now credit unions are growing by leaps and bounds, serving middleand upper-income people. Why should the exemption continue?"

The study is: "A Competitive Advantage: A study of the federal tax exemption for credit unions." It was conducted by John Av. Tatom, adjunct scholar at the Tax Foundation and adjunct professor in the department of economics at DePaul University in Chicago.

Despite the original mission of credit unions to serve low-income people, Tatom finds no solid evidence that credit unions have done so. In fact, most credit unions have an occupational bond that requires members to be employees, often in industries with relatively high-wage jobs.

Tatom concludes that the principal justification for the tax exemption is just that it already exists. "Under current law, as it is being enforced, there is no good policy argument based on equity or efficiency for maintaining the tax exemption," Tatom concludes.

The study can be viewed on line at http://www.taxfoundation.org/ creditunionstudy. pdf.

Quick response to fire damage

A Minnesota company and an Illinois company provided personnel to help LaSalle Bank recover after its Dec. 6 fire in downtown Chicago. Permaco Inc., of Lake Bluff, Ill., and Quantum Fire and Water Restoration of Bloomington, Minn., provided more than 100 people who worked to mitigate damage to the 46-story building from fire, smoke, soot and water. Although the fire was largely confined to a single floor, several floors below the fire suffered damage. The bank reopened its street-level retail office by Dec. 13.

More than 450 firefighters responded to the fire at 135 South LaSaIIe Street, where LaSaIIe Financial has its headquarters. The fire is estimated to have caused more than $10 million in damage.

Indiana banker honored for 45 years of service

A loyal employee ought to have the chance to make a notable entrance before colleagues, at least every 45 years or so. Patsy Hyatt, a longtime teller at Friendship State Bank, Friendship, Ind., walked into the bank's annual holiday party after stepping out of the stretch limo that the bank provided. She also walked into a standing ovation.

At the bank gathering, Chairman Jim Lemon Sr. praised Hyatt for her service to the company by saying, "Patsy treats the bank's money like it's her own, right down to that last penny which she will hunt for until she finds."

Hyatt also holds the unique distinction as being the only employee Lemon hired twice, but never fired. That's because Hyatt took a brief break from her duties at the bank. Hyatt's husband, children and grandchildren all were present to honor her.

Design/build firm receives industry recognition

HTG Architects was recognized with awards recently for two of its bank projects. The Minnesota Chapter of the National Association of Industrial and Office Properties bestowed its Award of Excellence on the Eden Prairie, Minn.-based firm for its work on Citizens Bank Minnesota, Lakeville. For that project, HTG combined natural materials, location and visibility to make a strong statement, a company spokesperson said.

The firm also received an Award of Merit from the Associated Builders and Contractors of Minnesota for its work on the Security State Bank of Howard Lake Business Campus. That project combined banking space with a coffee shop and a medical clinic. HTG shared the Award of Merit, bestowed in the commercial construction category, with its construction partner on that project, Shingobee Builders of Loretto, Minn.

"This project gave our team an opportunity to work together closely and succeed in developing a project meeting the objectives of the bank and community," said project architect Phil Blasko.

Extras...

* The Chicago Federal Reserve Bank announced that April 15 will be the last day it will accept check items for processing at its Detroit branch. Items currently being processed in Detroit will be handled at the Federal Reserve Bank of Cleveland after that date. Last July, Chicago Fed discontinued its check processing services at its Milwaukee location, and moved them to Chicago.

* Lisa Sodeika, senior vice president of corporate affairs for HSBCNorth America, was appointed to serve as one of 11 members of the Federal Reserve Board's Consumer Advisory Council. Sodeika will serve a threeyear term on the Council, which advises the Fed on the exercise of its responsibilities under the Consumer Credit Protection Act and on other matters in the area of consumer financial services. The council meets three times per year in Washington D.C.