Washington, D.C. (April 2, 2024) — Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey issued the following statement on tax-exempt Navy Federal Credit Union labeling its program to serve overseas military installations "Community Bank, Operated by Navy Federal Credit Union."

“Navy Federal Credit Union — the nation’s largest and most growth-oriented credit union — has announced it is calling its program to operate overseas military installations ‘Community Bank, Operated by Navy Federal Credit Union.’ The Federal Deposit Insurance Corp. and National Credit Union Administration should immediately issue cease-and-desist orders directing the $168 billion-asset institution not to refer to itself as a bank.

“Cease-and-desist orders from the FDIC and NCUA are in line with NCUA legal guidance that has determined that federal law does not explicitly permit insured credit unions to refer to themselves as banks or banking organizations. Although credit unions may like to present themselves as banks, federal agencies should ward off any attempts to conflate a bank with a credit union, which would likely result in confusion among servicemembers.

“Imitation is the sincerest form of flattery, but Navy Federal — which has been subject to multiple congressional inquiries following CNN’s reporting of racial disparities in the lender’s mortgage approval rates — appears to be trying to mask the fact that it is a global financial institution that does not pay taxes or meet the same level of regulatory standards as real community banks. It is not even clear whether this new breed of institution — not quite bank, not quite credit union — will be examined by the NCUA, be subject to federal fair lending laws, or provide federal insurance for military customer deposits.

“While credit unions have watered down the restrictions that Congress has imposed to justify their tax exemption, credit unions nevertheless differ from banks in at least two key respects: they remain exempt from taxation and the Community Reinvestment Act. This has become particularly relevant amid the rising wave of credit unions using their taxpayer-funded subsidies to purchase tax-paying community banks. If credit unions want to call themselves banks, they should switch charters — and pay taxes like real community banks.

“Meanwhile, with large credit unions now apparently insecure enough about their industry to pretend they’re community banks, Congress should use this opportunity to investigate the nation’s outdated credit union policies and whether the government should continue subsidizing acquisitions of real, local, taxpaying community banks.”

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.