Press Release: Washington, D.C. (May 1, 2024)—Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey issued the following statement following the latest acquisition of a tax-paying bank by a tax-exempt credit union.
“Tax-exempt credit unions now account for nearly a quarter of this year’s bank acquisitions, with each one expanding the federal tax exemption for more than $2 trillion in credit union assets and displacing a critical and trusted provider of credit in local communities. With community bankers in Washington this week for in-person meetings with federal policymakers as part of the 2024 ICBA Capital Summit, now is the time for Congress to act on this dangerous and harmful trend.
“ICBA polling shows Americans support a congressional review of credit union policy, so lawmakers have constituents on their side. According to polling of U.S. adults conducted by Morning Consult, 68% of adults say credit union customers should have the same consumer protections that banks provide, such as those provided by the Community Reinvestment Act, while 54% say Congress should investigate whether the credit union tax exemption is still warranted.
“The good news is there are clear and effective solutions to this problem, with states such as Tennessee, Colorado, Minnesota, Mississippi, and Nebraska restricting these deals in their states. But this trend is a matter of federal policy and national economic importance, and Congress should respond by holding hearings, requesting a Government Accountability Office study on the credit union industry, and considering 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.
“With the nation’s community banks accounting for roughly 60% of U.S. small-business loans and 80% of agriculture loans, Congress should use this opportunity to investigate the nation’s outdated credit union policies and whether the government should continue subsidizing acquisitions of local, taxpaying community banks.”
About ICBA
The Independent Community Bankers of America® has one mission: to create and promote an environment where community banks flourish. We power the potential of the nation’s community banks through effective advocacy, education, and innovation.
As local and trusted sources of credit, America’s community banks leverage their relationship-based business model and innovative offerings to channel deposits into the neighborhoods they serve, creating jobs, fostering economic prosperity, and fueling their customers’ financial goals and dreams. For more information, visit ICBA’s website at icba.org.
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