WASHINGTON– The Independent Community Bankers of America (ICBA) is again calling Congress to hold hearings to investigate credit union acquisitions of banks following the announcement VyStar Credit Union is buying a $1.6-billion bank in Georgia.
VyStar, said the Independent Community Bankers of America (ICBA), is “leveraging its tax exemption and crossing state lines to purchase” Jonesboro, Ga.-based Heritage Southeast Bank, “eliminating a locally based lender and further consolidating the banking industry.”
CUToday.info has coverage of the acquisition here. Since the initial report, it was reported VyStar will pay $195.7 million for the bank, according to Hovde Group, the investment bank that advised Heritage Southeast, as first reported by BankDive.com.
In its statement, the ICBA said it is calling on Congress to hold hearings on this trend and repeating its request a Government Accountability Office study be conducted “on the evolution of the credit union industry and National Credit Union Administration supervision.”
‘Faulty NCUA Oversight’
"While community banks have accounted for more than 60% of Paycheck Protection Program loans to lead the economic response to the pandemic, the dated credit union tax exemption and faulty National Credit Union Administration oversight are claiming another of these essential local institutions,” ICBA President and CEO Rebeca Romero Rainey said in a statement. “The current rash of taxpayer-funded credit union acquisitions exacerbates industry consolidation, shrinks state and local tax revenues, limits the reach of the Community Reinvestment Act, and again shows that tax-exempt credit unions have become virtually indistinguishable from taxpaying commercial banks.”
The ICBA added that CU acquisitions of “community banks have a demonstrably negative impact on local communities and taxpayers.”
The bank group pointed to S&P Global data it said showed there have been 93 acquisitions over the past 19 years, with the total assets of acquiring credit unions totaling more than $157.5 billion, while acquired community banks totaled $149.8 billion, “amounting to a loss of more than $264 million annually in income taxes.”
Policymakers Need to ‘Wake Up’
According to the ICBA, the Joint Committee on Taxation has tallied the federal cost of the credit union tax exemption at roughly $10 billion through 2022, at “an annual taxpayer cost of $2.5 billion and rising.”
“Each transaction also increases the portion of the financial services industry exempt from Community Reinvestment Act oversight at the expense of taxpayers,” the ICBA said.
The ICBA said it will continue calling on policymakers and the public to “Wake Up” to the costly tax subsidies and irresponsibly lax oversight of the nation’s credit unions.