WASHINGTON–The Independent Community Bankers of America (ICBA) has launched a print and digital advertising campaign that asks if credit unions have “lost their way" and calls on Congress to "investigate."
“Congress granted credit unions a tax exemption nearly a century ago intended to help people of small means, but today many are exploiting it at taxpayers’ expense,” the ads state. “It’s time for another look.
In releasing the ads, the ICBA said the objective is to “inform Americans about the credit union tax exemption and its impact on financial services consolidation in local communities.”
The new print ads, shown below, are running this week and next in editions of USA Today in Florida, Georgia, Illinois, Indiana, Michigan, Minnesota, and Wisconsin, and among the other claims made argue the tax exemption subsidizes credit union acquisitions of local community banks. The campaign—which also will feature online digital ads in the coming weeks—directs readers to icba.org/cuhearings where the ICBA offers a state-by-state analysis of what it says are the “tax-free” assets held by credit unions, including what the ICBA said is expenditures on non-member expenses.
‘Growth-Obsessed Credit Unions’
“With the House Financial Services Committee holding an upcoming subcommittee hearing on banking consolidation, ICBA is reminding lawmakers and their constituents of how growth-obsessed credit unions are exploiting their tax exemption to reduce financial choices for individuals and small businesses—and reduce tax revenues at both the federal and local levels,” ICBA President and CEO Rebeca Romero Rainey said in a statement. “Congress granted credit unions a tax exemption to serve people of modest means—not to subsidize their rapid growth at the expense of local communities. After nearly a century, it’s time for another look.”
In its statement announcing the campaign, the ICBA went on to say, “The tax exemption allows credit unions to make inflated purchase offers well above the book value of acquired community banks—while cutting regulatory safeguards for low- and moderate-income consumers due to credit unions’ exemption from the Community Reinvestment Act. Further, every credit union purchase of a community bank increases the cost of the tax exemption because the taxable activity at the bank becomes tax-exempt. At the federal level alone, the credit union tax exemption costs taxpayers $2 billion per year and rising.
3 Requests for Congress
The ICBA is calling on policymakers to:
- Implement an “exit fee” on CU acquisitions of banks to “capture the value of the tax revenue that is lost once the business activity of the acquired bank becomes tax-exempt.”
- Hold congressional hearings on “how the credit union tax exemption fuels these transactions.”
- Request a Government Accountability Office study on the evolution of the credit union industry and National Credit Union Administration supervision.