WASHINGTON–The  Independent Community Bankers of America has issued a statement critical of the latest acquisition of a bank by a credit union, using news of the purchase to again call for ending the credit union tax exemption.

As the CU Daily was first to report here,  the $8.1-billion, Lakeland, Fla.-based MIDFLORIDA Credit Union said it plans to acquire Prime Meridian Holding Co. and its wholly owned subsidiary, the $923.8-million Prime Meridian Bank, which is based in Tallahassee.

‘Growing Skepticism’

“Following last year’s record number of community bank acquisitions by tax-exempt credit unions, the latest deal further demonstrates why the growing skepticism of credit union tax and regulatory exemptions must evolve into policymaker action,” said ICBA President and CEO Rebeca Romero Rainey in a statement. “This is the third bank that this growth-obsessed credit union has acquired in the past five years. 

“While Federal Reserve Governor Michelle Bowman has said regulatory disparities between community banks and credit unions distort competition, and former FDIC Chair Sheila Bair has written that Washington should reexamine credit union tax subsidies as Congress considers tax reform this year, ICBA continues calling on Congress to eliminate the federal tax exemption for credit unions over $1 billion in assets.

‘Straying Far Beyond Mandate’

“With credit unions straying far 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, consumers increasingly support reforms to credit union policies,” Romero Rainey’s statement continued. “For instance, recent ICBA polling conducted by Morning Consult found that 62% of U.S. adults say credit unions that operate like banks should have to pay taxes like banks and 62% support a congressional investigation of the credit union industry’s tax and regulatory exemptions. 

“As these financial firms increasingly use their taxpayer-funded subsidies to finance multimillion-dollar NFL stadium naming rights deals, buy private planes for their senior executives, and raise funds from Wall Street hedge funds and private equity firms while fueling industry consolidation through acquisitions of tax-paying community banks, policymakers should eliminate this taxpayer expense to help preserve market choice for consumers and small businesses.” 

Open Letter to Congress

The ICBA noted its  “Repair, Reform, and Thrive” plan and open letter to the 119th Congress have urged lawmakers to use the current debate over tax reform to address credit unions’ tax and regulatory advantages. 

America’s Credit Unions Responds

In response to the ICBA statement, America’s Credit Unions President and CEO Jim Nussle said in a statement, “Bankers are once again distorting reality in their attempt to eliminate credit union competition and add a new tax on 142 million Americans who choose to be a credit union member. As we’ve reiterated multiple times: Banks choose to sell to credit unions—a sale that is approved by their shareholders—because of the local benefits such a sale provides. More than four-fifths of bank asset sales to credit unions involved a low-income designated credit union, further contradicting bankers’ claims that credit unions aren’t focused on serving people who need affordable financial services the most. As they have for more than 100 years in the U.S., credit unions are committed to supporting Main Street and financial prosperity for all, and that’s where their focus remains even as bankers try to pivot from matters that actually matter.”