WASHINGTON—As expected, the Independent Community Bankers of America is criticizing the latest credit union bank buy announcement.
As CUToday.info reported, Frontier Credit Union has agreed to buy First Citizens Bank of Butte.
Not wasting any time, ICBA President and CEO Rebeca Romero Rainey issued a statement that continues the banking industry’s mantra—that credit union purchases of banks are bad for communities and local and national tax coffers, and are another reason CUs should. be taxed.
“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,” Romero Rainey said.
“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,” she continued. “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.
“As these tax-exempt financial firms increasingly use their taxpayer-funded subsidies to finance multimillion-dollar NFL stadium naming rights deals, buy private planes for 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,” Romero Rainey concluded.
The ICBA has been lobbying aggressively for credit unions above $ billion in assets to be taxed.
'Predictable Rhetoric'
The Defense Credit Union Council termed the ICBA's latest attack on CUs "predictable rhetoric."
"When a bank sells to a credit union it often preserves local jobs, maintains access to financial services in underserved areas, and introduces a member-centric approach to banking," said Jason Stverak, DCUC chief advocacy officer. "These mergers are strategic decisions aimed at enhancing service offerings, expanding reach, and ensuring financial stability—not mere growth for growth’s sake. The ICBA’s argument that credit unions’ tax-exempt status is unjustified due to their size ignores the fundamental differences between credit unions and for-profit banks. Credit unions reinvest earnings into member benefits, such as lower loan rates and higher savings yields, rather than distributing profits to shareholders. This structure justifies their tax status, regardless of asset size.
"The financial landscape is evolving, and consumers are seeking institutions that prioritize their needs. Credit unions offer an alternative to traditional banks, fostering competition that benefits consumers. The ICBA’s resistance to this evolution appears more about limiting competition than protecting community interests," continued Stverak. "It’s time to move beyond the ICBA’s repetitive objections and recognize the positive impact these acquisitions can have on communities. These mergers are not threats but opportunities to enhance financial services, uphold community values, and empower consumers through cooperative banking models."
False Narrative
America's Credit Unions termed ICBA's blast a "false narrative."
"Once again, the bankers are peddling misinformation about the credit union industry and conveniently avoiding the facts," said Jim Nussle, America's Credit Unions president/CEO. "When banks choose to sell to credit unions, it's because it's the best option for people—their employees, their customers, and their communities. Credit unions keep branches open in places that may otherwise turn into banking deserts. They keep jobs. They keep affordable financial services available to families. Plus, 84% of these transactions involve low-income designated credit unions and every bank sale is subject to an average 25% tax of the purchase price.
"When banks buy banks—which has happened more than 2,400 times since 2012, compared to roughly 100 bank sales to credit unions—they often downsize and stop services," continued Nussle. "And on the topic of tax, studies show that Subchapter S banks, which don't pay corporate taxes, don't pass their tax status savings onto consumers. But credit unions do use their tax status to reinvest in their members and communities. While the bankers are focused on their self-interests to protect their profits, credit unions are focused on people and securing policies that will strengthen our nation."