WASHINGTON —The Independent Community Bankers of America (ICBA) has again issued a statement critical of credit unions and the CU tax exemption following the latest acquisition of a bank by a credit union. America’s Credit Unions has responded by saying the bank group is “telling lies.”
As the CU Daily reported here, Tuscaloosa, Ala.-based Alabama ONE Credit Union said it has entered into a purchase and assumption agreement to acquire substantially all assets and liabilities of Peoples Independent Bank in Boaz, Ala.
“With tax-exempt credit unions resuming their rapid pace of community bank acquisitions this year, ICBA and the nation’s community bankers continue our call for policymakers to address the favorable credit union tax treatment that is driving these harmful deals,” ICBA President and CEO Rebeca Romero Rainey said in a statement. “A recent data analysis from ICBA clearly demonstrates that these acquisitions are harming small businesses and local communities, with community banks outperforming credit unions in high-poverty areas. As Congress works to advance various policy priorities this year, it is time for lawmakers to eliminate the federal tax exemption for credit unions over $1 billion in assets.”
What ICBA Says Its Analysis Shows
The ICBA said its analysis of acquisitions of banks by credit unions shows:
- More than 80% of acquisitions since 2010 involved a credit union with more than $1 billion in assets, while more than 40% involved a credit union headquartered in a different state than the acquired bank.
- In areas where community banks participated in Small Business Administration lending programs, SBA lending fell after nearly 80% of credit union acquisitions.
- Total mortgage applications decreased in 57% of affected service areas following an acquisition, while the amount loaned per approved mortgage application decreased in 61% of acquisitions and mortgage denial rates increased in 61% of acquisitions.
“With credit unions straying beyond their founding congressional mandate of serving people of modest means with a defined field of membership, such as those with the same church or employer, an ICBA policy resolution calls on policymakers to end the federal tax exemption for credit unions with $1 billion or more in assets or to establish tax parity between credit unions and community banks,” the bankers group said in a statement.
America’s Credit Unions Responds
“The Independent Community Bankers of America is once again telling lies and twisting data to attack credit unions and get the government to stifle competition. As we’ve repeatedly pointed out, their ‘analysis’ is intentionally flawed,” America’s Credit Unions President and CEO Scott Simpson said in a statement. “Credit unions’ tax status reflects their not-for-profit, cooperative structure where members are the owners. They use it to provide lower-cost loans, higher savings rates, and financial counseling services for working people trying to make ends meet. Claims that credit union acquisitions of banks hurt communities are false. The credit union difference and positive impact on people’s lives is clear.”
