FOR IMMEDIATE RELEASE
ICBA Calls on Congress to Reject Credit Unions’ Latest Expansion of Powers
Banking Trade Groups United in Opposition to H.R. 2317
Washington, D.C. (March 1, 2006)—The Independent Community Bankers of America (ICBA), in a joint letter with the American Bankers Association and America's Community Bankers, called on Congress to oppose legislation that would increase credit union powers and allow them to further expand into commercial lending while enjoying unfair tax-subsidized status.
"Disguised as a regulatory relief bill, H.R. 2317, the Credit Union Regulatory Improvements Act of 2005 would allow tax-exempt credit unions to expand into full-blown commercial lending while lowering their minimum capital standards," the groups said in a joint letter to Congress. "It's important not to forget that credit unions were granted special tax-subsidized status to serve people of modest means, not finance commercial enterprises."
"We are urging Congress to forego granting tax-exempt credit unions even more authority to make business loans, when they fail to show how they fulfill the very mission for which they were established -- serving the underserved," said David E. Hayes, ICBA chairman, and president and CEO of Security Bank, Dyersburg, Tenn. "Congress already spoke on this issue when lawmakers put in place limits on business lending and excessive risk-taking by tax-exempt credit unions."
Now the $650 billion credit union industry is asking Congress to increase credit unions' business lending authority from the current cap of 12.25 percent to 20 percent of total assets and to exclude all business loans of less than $100,000 from the cap, up from the current $50,000 level.
"This credit union bill would only exacerbate the inequities fueling the aggressive expansion of complex credit unions, while putting both smaller credit unions and tax-paying financial institutions at a greater competitive disadvantage," said Hayes.
ICBA has long opposed expanded powers for credit unions, particularly the proposal to raise the cap on member business loans, so long as credit unions remain exempt from taxation. ICBA is a strong advocate for tax parity between community banks and credit unions, arguing that a fair and unbiased tax system would apply the same tax treatment to similar industries, economic actions and transactions.