WASHINGTON–The Independent Community Bankers of America said it has formed a new task force to address what it called the “disturbing trend” of “large credit unions increasing their taxpayer-subsidized footprint by buying up smaller, taxpaying community banks.”
In addition, the ICBA said its Credit Union Task Force is continuing its long-standing call for policymakers to re-examine the credit union industry’s tax and regulatory subsidies.
The announcement of the new task force follows by just a week a separate demand by ICBA that Congress investigate NCUA over taxi medallion loans, as CUToday.info reported here.
"The recent surge in credit union acquisitions of community banks worsens banking industry consolidation, reduces tax revenues for local communities, and furthers the credit union industry's continued unbridled growth and encroachment into full-service banking," ICBA President and CEO Rebeca Romero Rainey said in a statement. "Through the ICBA Credit Union Task Force, ICBA and the nation's community bankers will be shining a light on this troubling trend, which yet again illustrates how far credit unions have strayed from the original purpose underlying their tax exemption. ICBA will continue our calls for tax and regulatory equity between tax-exempt credit unions and taxpaying community banks."
According to ICBA, there is an asset “disparity” between the credit unions buying banks and the banks being bought. The bankers’ group cited data from S&P Global on nine credit union acquisitions of community banks over the past year, and said the total assets of acquiring credit unions was $24 billion, while acquired community banks totaled $2.3 billion.
“These transactions amount to a loss of roughly $3.9 million in annual income taxes, with the federal cost of the credit union industry’s tax exemption costing taxpayers nearly $2 billion annually and rising, according to the Joint Committee on Taxation,” the ICBA said.
The ICBA also said the “inequity is exacerbated” by the fact credit unions do not have to comply with Community Reinvestment Act rules.
“Meanwhile, the National Credit Union Administration continues to act as an advocate for the industry it is charged with regulating,” the ICBA said. “The NCUA has advanced a series of rules expanding credit unions’ ability to dodge membership restrictions, make commercial loans, and leverage their tax subsidy to raise capital from outside investors. It also has established bureaucratic obstacles and roadblocks to credit union conversions and mergers that make it more difficult for a bank to acquire a credit union than vice versa.”
The ICBA further argued the “current rash of mergers is yet another indicator that tax-exempt credit unions have become virtually indistinguishable from taxpaying commercial banks.”
The group said it will continue to call on Congress and state legislatures to “act on this unbalanced arrangement.”
The ICBA did not release any additional information on what its new task force will do or potentially publish.