The Independent Community Bankers of America (ICBA), led by President and CEO Rebeca Romero Rainey, has expressed concerns about the recent purchase of a tax-paying bank by a tax-exempt credit union. This deal is the 11th such transaction in 2024, indicating a trend in the U.S. financial sector. Rainey notes that this trend expands the federal tax exemption to assets now totaling over $2 trillion and affects community banks, which are key local credit providers.
Rainey highlighted the negative impact of current regulations that she believes favor credit unions over community banks. She stated that recent changes in regulations have introduced numerous new rules, complicating the industry and encouraging consolidation. This situation has made it easier for credit unions to buy banks than for banks to acquire or merge with credit unions, due to fewer regulatory barriers from the National Credit Union Administration compared to federal banking regulators.
The ICBA is calling on Congress to address this issue, which now accounts for about a quarter of all banking sector acquisitions in 2024. Some states, including Tennessee and Nebraska, have started to pass laws against these acquisitions. However, ICBA thinks a national effort is needed. They suggest holding congressional hearings, conducting a Government Accountability Office study of the credit union sector, and possibly implementing an ‘exit fee’ on acquisitions to compensate for the tax revenue lost when a bank becomes tax-exempt.
According to a poll by Morning Consult for ICBA, there is widespread public support for Congress to review credit union policies, especially regarding their tax and Community Reinvestment Act exemptions. ICBA references the 1951 congressional action that ended tax exemptions for similar institutions to support their position that current policies need reevaluation.
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Credit unions are run under NCUA guidelines while banks are FDIC. NCUA has stricter standards and are not for profit. Sounds like someone is upset they cant get their fingers in the money train.
h/t Phennommennonn
