Washington, D.C. (Sept. 17, 2024)—Thanks to Independent Community Bankers of America (ICBA) advocacy, the FDIC today 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 tax-exempt credit unions. With the FDIC taking this important ICBA-advocated step amid a surge of credit union acquisitions of tax-paying community banks, ICBA today is releasing new polling data showing Americans increasingly support a congressional review of credit union policy.
“With the FDIC now recognizing that credit unions’ bank acquisitions may require additional scrutiny following ICBA outreach, our latest polling shows the Americans who subsidize the credit union industry are increasingly skeptical of whether they’re getting their money’s worth,” ICBA President and CEO Rebeca Romero Rainey said. “As credit unions increasingly use their taxpayer subsidies to finance acquisitions of tax-paying community banks, Congress should investigate credit union practices and reconsider the credit union tax exemption, which lawmakers haven’t done since the policy was enacted 90 years ago.”
As advocated by ICBA, today’s FDIC statement of policy on agency reviews of bank mergers says transactions involving a credit union may require additional information about their impact on the convenience and needs of affected consumers because credit unions are exempt from the Community Reinvestment Act. In a June comment letter, ICBA called on the FDIC to expand the scope of its bank merger reviews to include credit unions because their diluted field-of-membership restrictions no longer limit the ability of credit unions to attract customers, especially given their tax-exempt status.
This increased scrutiny aligns with ICBA’s latest polling, which shows consumer concerns with tax-exempt credit unions acquiring tax-paying community banks. According to the polling of U.S. adults conducted by Morning Consult:
61% — including 70% of Democrats and 64% of Republicans — say Congress should investigate whether credit unions should be able to acquire banks given credit unions’ tax and regulatory exemptions.
55% say policymakers should consider charging acquiring credit unions a fee on acquisitions of tax-paying banks to capture part of the tax revenue that is lost once the acquired bank’s business activity becomes tax-exempt.
54% — including 58% of Democrats and 57% of Republicans — say Congress should investigate whether the credit union tax exemption is still warranted.
ICBA previously released results showing Americans are growing increasingly uneasy with credit unions’ regulatory exemptions and support reforms to policies that arbitrarily favor these tax-exempt financial firms.
More information on federal credit union policy is available on the ICBA website.
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.
