Washington, D.C. (June 4, 2024) — Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey issued a statement following this year’s 12th acquisition of a tax-paying bank by a tax-exempt credit union.
“ICBA and the nation’s community banks have repeatedly warned about the dangers of tax-exempt credit unions acquiring tax-paying community banks, and this dangerous trend is only accelerating — accounting for roughly a quarter of this year’s banking industry acquisitions,” stated Rainey. “Each acquisition expands the federal tax exemption for more than $2 trillion in credit union assets and displaces trusted providers of credit in local communities — while demonstrating the urgency of addressing the burdensome regulatory environment.”
Rainey emphasized that an influx of new regulations, totaling 7,000 pages since July, combined with taxpayer-funded subsidies for the credit union industry are contributing to an irreversible decline in community banks across local communities nationwide. She also highlighted that while federal banking regulators’ slow merger approval processes hinder bank-to-bank deals, obstacles imposed by the National Credit Union Administration make it more difficult for a bank to acquire a credit union than vice versa.
“Congress must act on this dangerous trend,” urged Rainey. “While states such as Tennessee, Colorado, Minnesota, Mississippi, and Nebraska have acted to restrict these deals, Congress should respond to what is clearly a national issue with implications for local communities from coast to coast.”
Rainey called on Congress to hold hearings, request a Government Accountability Office study on the credit union industry, and consider implementing an ‘exit fee’ on these acquisitions to recapture lost tax revenue.
Polling conducted by Morning Consult for ICBA indicates public support for congressional review of credit union policies. Rainey pointed out historical precedent from 1951 when Congress revoked tax exemptions for building and loan associations, cooperative banks, and mutual savings banks because they operated similarly to commercial banks.
“With community banks leading the way in serving small businesses and agricultural lenders,” Rainey concluded, “Congress should similarly investigate the nation’s outdated credit union policies and whether the government should continue subsidizing acquisitions of local, taxpaying community banks.”
The Independent Community Bankers of America® aims to create an environment where community banks flourish through advocacy, education, and innovation. More information can be found at icba.org.