Independent Community Bankers of America (ICBA) officials are encouraging federal lawmakers to examine the increasing number of credit union community bank purchases.
“Congress granted credit unions a tax exemption to serve people of modest means — not to subsidize their rapid growth at the expense of taxpaying community banks and local communities,” ICBA President and CEO Rebeca Romero Rainey said. “These transactions — facilitated by a tax exemption that allows credit unions to make inflated purchase offers well above the book value of the acquired banks — eliminate locally based lenders, further consolidate the banking industry, and cut regulatory safeguards for low- and moderate-income consumers due to credit unions’ exemption from Community Reinvestment Act oversight.”
The ICBA indicated each credit union acquisition of a community bank boosts the cost of the credit union tax exemption — translating to $2 billion annually to taxpayers.
ICBA proposed actions, per officials, include implementing an exit fee on acquisitions to capture tax revenue value lost once the business activity of the acquired bank becomes tax-exempt; conduct congressional hearings to review how the credit union tax exemption fuels the transactions; and request a Government Accountability Office report regarding the evolution of the credit union industry and National Credit Union Administration supervision.