Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey has issued a statement following the latest acquisition of a tax-paying bank by a tax-exempt credit union. Rainey expressed concern over the growing trend, with tax-exempt credit unions accounting for approximately 25% of this year's bank acquisitions.
"Each of these acquisitions expands the federal tax exemption for more than $2 trillion in credit union assets and displaces a trusted provider of credit in local communities," said Rainey. "Congress must act on this dangerous trend."
Rainey further noted that lawmakers have their constituents' support in reviewing this policy, as indicated by ICBA polling conducted by Morning Consult. The poll revealed that 68% of adults believe credit union customers should have the same consumer protections provided by banks, such as those under the Community Reinvestment Act. Additionally, 54% said Congress should investigate whether the credit union tax exemption is still warranted.
Rainey suggested that while this harmful trend has accelerated in recent years, there are long-standing solutions. States including Tennessee, Colorado, Minnesota, Mississippi, and Nebraska have restricted these deals. She urged Congress to respond similarly to this national issue.
"ICBA and community bankers continue calling on Congress to hold hearings, request a Government Accountability Office study on the credit union industry, and consider an 'exit fee' on these acquisitions to capture the value of the tax revenue lost once the acquired bank’s business activity becomes tax-exempt," Rainey stated.
She concluded her statement by emphasizing that community banks serve as leading small-business and agricultural lenders nationwide. Therefore, she believes it is crucial for Congress to use this opportunity to investigate outdated credit union policies and assess whether government subsidies for acquiring local, taxpaying community banks should continue.
The Independent Community Bankers of America aims to create an environment where community banks can thrive through effective advocacy, education, and innovation. As local and trusted sources of credit, community banks leverage their relationship-based business model to channel deposits into the neighborhoods they serve, thereby creating jobs and fostering economic prosperity.