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Credit unions can receive a tax credit for offering paid leave to employees to get the COVID vaccine. Policymakers pursue ways to identify and address climate change risk in the financial sector. NAFCU's Curt Long talks economic indicators with Cheddar News. Get more details on these developments and others credit unions should be aware of from this week.

Tax credit for vaccine leave, ECIP applications extended

The American Rescue Plan Act established a tax credit for employers offering paid leave to employees to get the COVID vaccine and recover from any side effects of the vaccine. The Treasury Department and IRS this week issued a fact sheet on the tax credit, and NAFCU confirmed its interpretation of the statutory text that provides the tax credit: Credit unions are eligible to receive the credit.

The fact sheet lists eligible employers as any businesses – including a tax-exempt organization – with fewer than 500 employees. According to the act's language, any organization exempt from taxation under 501(a) is eligible to apply for the credit.

Access the fact sheet and get more details on how the tax credit amount is calculated and how to claim the credit. NAFCU also has a resource detailing key credit union provisions of the American Rescue Plan Act available online.

In addition, the Treasury Department Thursday extended the application deadline for its Emergency Capital Investment Program – providing funds to CDFIs and MDIs to support small businesses and consumers in their communities – from May 7 to July 6.

Policymakers take steps to address climate impact on financial sector

Treasury Secretary Janet Yellen this week gave an update on the administration's efforts to address financial risks posed by climate change. She identified three challenges facing this endeavor:

• the lack of data needed to appropriately assess climate change risk, indicating that more regulation and supervision may be needed;
• the long-term nature and unpredictability of climate change, which could require new, long-term approaches for assessing risk, such as new scenarios and stress-testing requirements; and
• climate change science is relatively new to the financial services industry, but swift action is needed to address threats posed.

Yellen indicated that Treasury is coordinating efforts across several agencies, in addition to global outreach, and noted the Federal Housing Finance Agency's (FHFA) and Financial Stability Oversight Council's (FSOC) first steps on the issue. Earlier this week, NAFCU provided feedback to the FHFA on the risks climate change and natural disasters pose to the housing finance system and advocated for coordinated efforts among FSOC and other federal agencies.

President Joe Biden is working on an executive order to combat climate-related financial risks that could create new regulations on businesses, including the banking industry. It is expected to require, among other things, NAFCU-sought FSOC coordination on this issue. The Biden Administration yesterday and today hosted a climate summit with leaders from around the globe.

ICYMI: NAFCU’s Long talks employment situation with Cheddar News

NAFCU Chief Economist and Vice President of Research Curt Long joined Cheddar News’ Kristen Scholer Thursday to discuss employment numbers and future optimism around the job market. Long shared that the March jobs report felt like “a turning point and that optimism is very high and for good reason.”

“The vaccine issue is the number one issue for the overall economy, and the biggest reason why we got the turning point in March is the success of the vaccines and stemming the winter surge,” Long noted.

Long rounded out the interview by noting the importance behind a recovering service sector to the overall economy and GDP – including restaurants, bars, concert venues and event spaces, among others.

House Financial Services Committee advances several bills

The House Financial Services Committee wrapped up its markup earlier this week, resulting in several bills that could impact credit unions being reported favorably out of committee. Ahead of the markup, NAFCU Vice President of Legislative Affairs Brad Thaler shared the association's and credit unions' perspective on issues ranging from the fiscal year 2022 budget, to fintech, to DEI, and more. The NAFCU-supported task forces on artificial intelligence and fintech were reestablished, and all legislation under consideration was reported favorably out of committee.

Of note, during the budget discussion, some lawmakers backed NAFCU's call to establish a bipartisan commission at the CFPB and for it to be subject to congressional oversight via the appropriations process.

Republicans counter infrastructure plan

Senate Republicans, led by Sen. Shelley Moore Capito, R-W. Va., have countered President Biden's infrastructure and jobs plan with their own proposal. While Biden's package totals $2.3 trillion and covers a range of issues that some have argued extend beyond the scope of "infrastructure," the Senate GOP's is a trimmed down version, totaling about $568 billion and focused on more narrow, traditional aspects of infrastructure. Among the differences in the proposals: The Republican plan seeks to preserve all of the 2017 Tax Cuts and Jobs Act, including the corporate tax rate of 21 percent, while Biden has proposed raising the corporate tax rate and reassessing some other business tax breaks to help raise revenue.

NAFCU will monitor congressional efforts and ensure that lawmakers are informed of the benefits of the credit union tax exemption and the negative impacts it could have on the economy if the tax status were to be changed.