The recent acquisition of Lewis and Clark bank by Maps Credit Union has renewed calls from the Independent Community Bankers of America (ICBA) to end the federal tax-exempt status of credit unions.
“Last year marked a record number of credit union acquisitions of community banks, and the public as well as policymakers are increasingly questioning the fairness of subsidizing rapid consolidation in the community banking sector,” ICBA President and CEO Rebeca Romero Rainey said. “Growth-obsessed credit unions now rival banks in size, holding trillions in assets while maintaining a nonprofit status that no longer reflects their operations. Credit unions have strayed far beyond their congressional mandate, which originally granted tax-exempt status to serve people of modest means in a defined field of membership, such as employees of a single company.”
ICBA is urging lawmakers to use the current debate over tax reform to address credit unions’ tax and regulatory advantages. Last year, the FDIC issued a statement of policy on bank mergers that said additional scrutiny may be needed for deals involving credit unions. Further, recent ICBA polling conducted by Morning Consult found that 62 percent of consumers support a congressional investigation of the credit union industry’s tax and regulatory exemptions.
“While community banks focus on financing consumers’ dreams and supporting local businesses and the agriculture sector, growth-obsessed credit unions exploit their tax exemption to finance multimillion-dollar NFL stadium naming rights deals, fuel industry consolidation by acquiring community banks, and raise funds from Wall Street hedge funds and private equity firms. Eliminating the federal tax exemption for credit unions over $1 billion in assets will help protect choice for consumers and small businesses,” Rainey said.