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Credit unions use their tax-exempt status to weaken community banks and their capacity to meet the credit needs of local communities, according to a former credit union executive who now works for a community bank.
Government Loopholes: Clint Walters, chairman and CEO of The First Security Bank in Beaumont, Texas, writes in a new American Banker op-ed that credit unions exploit every loophole the government provides to undercut their competition and acquire banks at a record pace.
Nonprofit Status: Walters also said the government-subsidized entities’ nonprofit status no longer supports the mission of providing low-cost credit to individuals of modest means. Rather, it allows credit unions to spend lavishly on technology, facilities, executive compensation and naming rights of sporting facilities—at the cost of profits that could be returned to credit union members.
ICBA View: On social media, ICBA President and CEO Rebeca Romero Rainey said the op-ed spotlights everything wrong with credit union policy. ICBA has repeatedly called on Congress to investigate the credit union tax and regulatory advantages that are fueling acquisitions of taxpaying community banks, including in a recent American Banker op-ed from Romero Rainey.
Public Opinion: ICBA polling released earlier this year showed Americans support reforms to policies that arbitrarily favor credit unions. According to the polling conducted by Morning Consult, 68% of adults said credit union customers should have the same CRA protections that banks provide, while 54% said Congress should investigate whether the credit union tax exemption is still warranted.
Grassroots Resources: Community bankers can use ICBA’s Be Heard grassroots action center to call on members of Congress to hold a hearing on credit union policy. Additional resources are available on the ICBA website.