Latest Acquisition of Tax-paying Community Bank Comes Amid Increased Attention to Credit Union Tax Exemption

Washington, D.C. (Sept. 4, 2024)-Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey today issued the following statement after this year's 15th acquisition of a tax-paying bank by a tax-exempt credit union.

"Despite ICBA and the nation's community banks repeatedly warning about the dangers of tax-exempt credit unions acquiring tax-paying community banks, this dangerous trend is only accelerating - accounting for roughly a quarter of this year's banking industry acquisitions. With each acquisition expanding the federal tax exemption for more than $2 trillion in credit union assets and displacing trusted providers of credit in local communities, the need for policymakers to review the credit union industry's tax and regulatory advantages is urgent.

"On the heels of last week's announcement that Northwest Federal Credit Union is leveraging its members' deposits to pay for Washington Commanders football stadium naming rights, too many credit unions are violating the limits established by Congress to justify their federal tax exemption. The news media and the public are clearly taking notice, with recent CNBC, Axios, and CNN coverage raising questions about credit union practices, while ICBA polling conducted by Morning Consult shows Americans support a congressional review of credit union policy.

"ICBA and community bankers continue our calls for Congress to hold hearings and to consider an 'exit fee' on credit union acquisitions of tax-paying banks to capture lost tax revenue resulting from these deals. Lawmakers not only have constituents on their side, but also historical precedent. In 1951, Congress revoked the tax exemption for building and loan associations, cooperative banks, and mutual savings banks, finding that these institutions operated much like commercial banks and should be taxed accordingly.

"With community banks leading the way in serving small businesses and agricultural lenders, Congress should similarly investigate the nation's outdated credit union policies and whether the government should continue subsidizing community banking consolidation."

About ICBA
The Independent Community Bankers of America® has one mission: to create and promote an environment where community banks flourish. We power the potential of the nation's community banks through effective advocacy, education, and innovation.

As local and trusted sources of credit, America's community banks leverage their relationship-based business model and innovative offerings to channel deposits into the neighborhoods they serve, creating jobs, fostering economic prosperity, and fueling their customers' financial goals and dreams. For more information, visit ICBA's website at icba.org.