USA Today ads highlight exploitation of credit union tax exemption
Washington, D.C. (Sept. 23, 2021) — The Independent Community Bankers of America (ICBA) this week launched a print and digital advertising campaign to inform Americans about the credit union tax exemption and its impact on financial services consolidation in local communities.
In new print ads running this week and next in editions of USA Today in Florida, Georgia, Illinois, Indiana, Michigan, Minnesota, and Wisconsin, ICBA notes the tax exemption subsidizes credit union acquisitions of local community banks. The campaign—which also will feature online digital ads in the coming weeks—directs readers to icba.org/cuhearings for more information.
“With the House Financial Services Committee holding an upcoming subcommittee hearing on banking consolidation, ICBA is reminding lawmakers and their constituents of how growth-obsessed credit unions are exploiting their tax exemption to reduce financial choices for individuals and small businesses—and reduce tax revenues at both the federal and local levels,” ICBA President and CEO Rebeca Romero Rainey said. “Congress granted credit unions a tax exemption to serve people of modest means—not to subsidize their rapid growth at the expense of local communities. After nearly a century, it’s time for another look.”
The tax exemption allows credit unions to make inflated purchase offers well above the book value of acquired community banks—while cutting regulatory safeguards for low- and moderate-income consumers due to credit unions’ exemption from the Community Reinvestment Act.
Further, every credit union purchase of a community bank increases the cost of the tax exemption because the taxable activity at the bank becomes tax-exempt. At the federal level alone, the credit union tax exemption costs taxpayers $2 billion per year and rising.
To fully understand and address this trend, ICBA is calling on policymakers to:
- Implement an “exit fee” on these acquisitions to capture the value of the tax revenue that is lost once the business activity of the acquired bank becomes tax-exempt.
- Hold congressional hearings on how the credit union tax exemption fuels these transactions.
- Request a Government Accountability Office study on the evolution of the credit union industry and National Credit Union Administration supervision.
For more information, visit www.icba.org/wakeup.
The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.
With nearly 50,000 locations nationwide, community banks constitute 99 percent of all banks, employ more than 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5.8 trillion in assets, over $4.8 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org