Washington, D.C. (Oct. 3, 2024)—Independent Community Bankers of America (ICBA) President and CEO
Rebeca Romero Rainey today issued the following statement after this year’s 17th acquisition of a tax-paying bank by a tax-exempt credit union — a new single-year
record.
“Acquisitions of tax-paying community banks by
tax-exempt credit unions have set a record high this year at precisely the
moment that policymakers and the American public are increasingly scrutinizing
these deals and the role of antiquated credit union policies.
“With credit unions accounting for roughly a quarter
of this year’s banking industry acquisitions, the 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 tax-exempt credit unions
— as advocated by ICBA. 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.
“And according to ICBA’s latest polling conducted by Morning Consult, 61% of U.S. adults —
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. 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.
“The news media and the American public are clearly
taking notice, with recent Bloomberg, CNBC, Axios, and CNN coverage
raising questions about credit union practices. To remedy this increasingly
concerning trend, ICBA and community bankers continue our calls 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.
“This needed policy change is in line with previous
banking industry reforms. In 1951, Congress revoked the tax exemption for
building and loan associations, cooperative banks, and mutual savings banks,
finding that these institutions operated much like commercial banks and should
be taxed accordingly. With community banks serving as the nation’s leading
small-business and agricultural lenders, Congress should investigate the
outdated credit union policies and whether the government should continue subsidizing
community banking consolidation.”
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.
