In a new letter to the editor, ICBA community banker Jeff Dick says that credit unions wanting access to municipal deposits without contributing back to the communities they claim to serve is a bad deal for Virginia.
Details: In a letter to the Fairfax County [Va.] Times, the chairman and CEO of MainStreet Bank in Fairfax, Va., writes:
Large credit unions continue to benefit from an outdated tax exemption, which cost Virginia $102.6 million in lost revenue in 2024 alone.
Credit unions are also exempt from Virginia’s Bank Franchise Tax, which generated $31 million for the state and $141 million for localities in 2024, while community banks pay into that system.
Credit unions now want access to municipal deposits—public funds generated by Virginia taxpayers—without contributing back to the communities they claim to serve, which means fewer local dollars for critical services.
Unlike community banks, credit unions are not governed by the Community Reinvestment Act, which requires institutions to meet the credit needs of the areas where they operate.
If credit unions want to function like banks, they should be taxed and regulated like banks.
ICBA View: ICBA urges states to prohibit the placement of public deposits in tax-exempt credit unions and supports applying CRA requirements to credit unions comparable to and with the same asset size distinctions as banks and thrifts.
Growing Media Scrutiny: The letter to the editor joins a growing chorus of opposition to credit union mission creep:
A Tyfone op-ed from ICBA Past Chairman Brad Bolton and ICBA leadership community banker Ken Hale spotlights why policymakers should examine credit union acquisitions of community banks.
In op-eds in the Natchitoches Parish Journal and the Shreveport Bossier Journal, Hale details how credit union acquisitions of community banks harm local communities.
Recent op-eds in American Banker and RealClear Markets target the credit union tax exemption following ongoing ICBA advocacy.
A previous article in The Banker—an imprint of the Financial Times—says some credit unions may be abandoning their mission with “Wall Street-style” behavior and no longer serving their core members.
Recent ICBA Advocacy: ICBA is calling on policymakers to end the federal tax exemption for credit unions with $1 billion or more in assets to uphold market choice for small businesses and consumers while addressing taxpayer-subsidized consolidation.