WASHINGTON–The Independent Community Bankers of America is calling on Congress to hold hearings on what it called the “surge in tax-exempt credit unions purchasing tax-paying community banks.”
In response, CUNA said it welcomes any opportunity to meet with policymakers to discuss the issue.
The ICBA sent separate letters to relevant House and Senate committees calling the trend the result of a “long-term transformation of the credit union industry,” and asking Congress to “investigate how it is reshaping the financial services landscape.”
Approximately 30 banks have been acquired by credit unions to date, while one CU has been purchased by a bank. One bank purchase by a CU in Colorado was recently blocked by regulators due to wording in that state’s laws.
“For decades, credit unions have used their tax subsidy and a permissive regulatory environment to expand their market share," ICBA President and CEO Rebeca Romero Rainey wrote in the letter. "What’s happening today — credit union 'weaponization' of their tax subsidy and lax regulatory environment to purchase whole community banks — is an order of magnitude more significant and warrants Congressional scrutiny.”
‘Taxpayer-Subsidized Footprint’
The letters to the House committees on Financial Services and Ways and Means and the Senate committees on Banking and Finance suggest there has been a “surge in large credit unions increasing their taxpayer-subsidized footprint by buying up community banks,” a scenario the bankers allege “worsens banking industry consolidation, reduces tax revenues for local communities, and furthers these tax-exempt companies' encroachment into full-service banking.”
The ICBA repeated its argument bankers have expanded well beyond the limits established by Congress to justify the industry’s tax exemption.
In response to the letter, CUNA’s chief advocacy officer, Ryan Donovan, said, “"We welcome every opportunity to engage policymakers in a discussion about the difference credit unions are making in the lives of their members, how credit unions are fulfilling the mission of Congress gave them, and why it is more important now than ever that credit unions work to advance their communities and empower financial well-being."
CUNA Sends Letter to Congress
Separately, prior to the ICBA letter, CUNA sent a letter of its own to all 535 congressional offices, this time with a message outlining how credit unions fulfill their congressionally bestowed mission by helping communities advance.
In the letter, CUNA's Donovan highlighted how credit unions provide everything from short-term emergency loans to future-building investments like mortgages and small business loans.
“Because credit unions are owned by the communities we operate in, helping those communities grow is vital to who we are and how we were formed. It’s why we’re always working to get to ‘yes’ when securing and growing your constituents’ financial futures,” Donovan wrote.
Other Points Made
The letter further states:
- Credit unions helped drive local economies with more than $25 billion in commercial loans in 2019
- More than 386,000 jobs were created through credit union commercial loans in the past year
- Nearly one-million families turned to their credit union for help with getting the car that gets them to work, school and beyond