ICBA issues statement after latest acquisition of a tax-paying bank by a tax-exempt credit union

Independent Community Bankers of America (ICBA) president and CEO Rebeca Romero Rainey issued the following statement after the latest acquisition of a tax-paying bank by a tax-exempt credit union, extending this year’s record to 20.

“This latest acquisition is yet another example of a tax-exempt credit union crossing state lines to acquire a tax-paying community bank — further expanding the federal tax exemption for more than $2 trillion in credit union assets and displacing trusted providers of credit in local communities.”

“With this year’s record number of transactions continuing to grow, it is no surprise that policymakers and the public are increasingly scrutinizing antiquated credit union policies and practices.”

“After the Federal Deposit Insurance Corporation (FDIC) recently approved a new statement of policy on bank mergers that for the first time explicitly states that additional scrutiny may be needed for deals involving credit unions — as advocated by the ICBA — Federal Reserve Governor Michelle Bowman said regulatory disparities between community banks and credit unions distort competition.”

“Further, Consumer Financial Protection Bureau penalties against VyStar Credit Union for harming consumers through its botched rollout of a new online banking system exemplify the risks posed by the National Credit Union Administration’s inability to examine credit union third-party service providers, as recognized by NCUA Chairman Todd Harper.”

“With ICBA polling conducted by Morning Consult showing 61% of U.S. adults say Congress should investigate whether credit unions should be able to acquire banks, it’s time for policymakers to respond to this trend with a comprehensive federal solution.

“ICBA and community bankers continue calling for Congress to hold hearings and to consider an ‘exit fee’ on credit union acquisitions of tax-paying banks to capture lost tax revenue resulting from these deals.”

“Recent coverage of harmful credit union practices by Bloomberg, CNBC, Axios and CNN demonstrate that Congress should reconsider the credit union tax exemption, like it has for building and loan associations, cooperative banks, and mutual savings banks.

“In 1951, lawmakers found that these institutions operated much like commercial banks and should be taxed accordingly. With community banks continuing to serve as the nation’s leading small-business and agricultural lenders, Congress should investigate the dated policies driving acquisitions and whether taxpayers should continue subsidizing community banking consolidation.”