Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey issued the following statement following the latest acquisition of a tax-paying community bank by a tax-exempt credit union.
“With the latest interstate acquisition of a tax-paying community bank by tax-exempt credit unions extending into Montana for the first time, it is time for the increasing criticism of credit union tax and regulatory exemptions to finally result in policymaker action.
“As credit unions continue to stray far beyond their founding congressional mandate of serving people of modest means with a defined field of membership, such as those with the same church or employer, consumers increasingly support reforms to credit union policies. For instance, recent ICBA polling conducted by Morning Consult found that 62% of U.S. adults say credit unions that operate like banks should have to pay taxes like banks and 62% support a congressional investigation of the credit union industry’s tax and regulatory exemptions.
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“Meanwhile, the growing debate over the credit union tax exemption and its impact on community bank acquisitions has continued to generate headlines, with CUToday reporting that more credit unions are considering converting to mutual banks, CU Daily writing that some in the credit union industry are concerned about mergers of large credit unions, and Banking Dive spotlighting ICBA’s calls for Congress to eliminate the federal tax exemption for credit unions over $1 billion in assets.
“As these tax-exempt financial firms increasingly use their taxpayer-funded subsidies to finance multimillion-dollar NFL stadium naming rights deals, buy private planesfor use by their senior executives, and raise funds from Wall Street hedge funds and private equity firms while fueling industry consolidation, policymakers should address this taxpayer expense to help preserve market choice for consumers and small businesses.”
ICBA’s “Repair, Reform, and Thrive” plan and open letter to the 119th Congressurge lawmakers to use the current debate over tax reform to address credit unions’ tax and regulatory advantages. Further, a policy resolution that ICBA introduced earlier this year formally calls on policymakers to end the federal tax exemption for credit unions with $1 billion or more in assets or to establish tax parity between credit unions and tax-paying community banks.