JACKSON, Miss.–The president of the Mississippi Bankers Association has authored an op-ed that has appeared in multiple news publications in the state that argues that not only do credit unions not pay taxes, they are using the tax savings to buy banks and hurting local communities in the process.
MBA President and FCEO Gordon Fellows touches on numerous themes that will be familiar to credit unions in his opinion piece, telling readers that while they may be “unaware of the significant policy dispute that exists between banks and credit unions…fairness is at the heart of the dispute.”
‘Taxpayer-Subsidized Banks’
“Banks believe - rightly so - that because credit unions are exempt from most federal and state taxes, and because regulatory erosion of credit union field of membership standards have essentially made credit unions the same as banks, that many larger credit unions are essentially taxpayer subsidized banks,” wrote Fellows.
Fellows said the largest credit union in Mississippi (Keesler FCU), with $4 billion in assets, is larger than 88% of Mississippi-headquartered banks.
“And that credit union paid less in state and federal taxes than each individual bank in Mississippi. Clearly fairness is missing from this equation,” Fellows stated. “Unfortunately, though, in recent years this problem of tax fairness has taken on a new dynamic that is literally putting community banks out of business. Big credit unions are taking advantage of their tax exemptions to acquire community banks. We’ve seen credit union acquisitions of community banks accelerating at an alarming rate—reaching an all-time record in just the first half of 2024, with credit unions announcing their intent to acquire $7.21 billion in bank assets—a 40% uptick from 2022.”
‘Wiped Off the Tax Rolls’
Fellows said the acquisitions will “unquestionably affect” the local communities that lose these banks.
“Local, state, and federal tax income will be wiped off the tax rolls, and credit unions are also held to less stringent consumer financial protection oversight than banks—yet another reason these acquisitions are so concerning,” he continued, pointing to CRA as an example.
Fellows noted that in 2022, at the urging of the Mississippi Bankers Association (MBA), the state of Mississippi took action to create a “fairer acquisition environment,” but added it is ultimately up to Congress to “exercise its oversight authority.”