After a second acquisition this week of a taxpaying community bank by a tax-exempt, billion-dollar credit union, ICBA continued to call for policymakers to end the federal tax exemption for credit unions with $1 billion or more in assets.
Details: In a national news release, ICBA President and CEO Rebeca Romero Rainey noted that lawmakers granted credit unions a full federal tax exemption on the condition they serve defined fields of membership, like teachers or firefighters in one region, but a growing number have exploited this tax loophole to grow exponentially.
What It Means for Community Banks: Romero Rainey noted billion-dollar credit unions are financing multimillion-dollar NFL stadium naming rights deals, buying private planes for senior executives, and raising funds from Wall Street hedge funds — all while enjoying a taxpayer-funded subsidy worth more than $2.5 billion.
Growing Scrutiny:
A May Bloomberg article captured lawmaker concerns about the full federal tax exemption for credit unions.
Recent ICBA polling conducted by Morning Consult shows 62% of U.S. adults say credit unions that operate like banks should have to pay taxes like banks.
An ICBA policy resolution introduced earlier this year formally calls on policymakers to end the federal tax exemption for credit unions with $1 billion or more in assets.