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Washington, D.C. (Sept. 24, 2024)—Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey today issued the following statement after this year’s 16th acquisition of a tax-paying bank by a tax-exempt credit union.
“The latest acquisition of a tax-paying community bank by a tax-exempt credit union — which ties the record for most in a single year — comes as policymakers and the American public are increasingly scrutinizing these deals and the role of antiquated credit union policies.
“The FDIC last week 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.
“Further, ICBA’s latest polling 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. 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.
“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, which is in line with historical precedent. 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 leading the way in serving small businesses and agricultural lenders, Congress should thoroughly investigate the nation’s outdated credit union policies and whether the government should continue subsidizing community banking consolidation.”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.