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Washington, D.C. (Oct. 23, 2024) — Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey today issued the following statement after the 19th acquisition of a tax-paying bank by a tax-exempt credit union in 2024, which expands on this year’s annual record.
“This latest deal of a Tennessee-based credit union acquiring a Kentucky bank comes months after Tennessee enacted a law barring credit union acquisitions of the state’s banks. With policymakers and the American public increasingly scrutinizing these deals, this latest example shows the importance of a federal response to tax-exempt credit unions acquiring tax-paying banks.
“For instance, 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 credit unions — as advocated by ICBA. And according to recent ICBA 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.
“With the news media increasingly taking notice of credit union practices in recent coverage from Bloomberg, CNBC, Axios, and CNN, policymakers must respond to this increasingly concerning trend with a federal solution. 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.
“Congress has a history of reconsidering financial institution tax exemptions. In 1951, lawmakers 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banks serving as the nation’s leading small-business and agricultural lenders, Congress should investigate the outdated policies driving the current acquisition trend and whether taxpayers should continue subsidizing community banking consolidation.”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.