WASHINGTON—The American Bankers Association did not waste an opportunity Wednesday to criticize credit union bank acquisitions and their tax-exempt status during a Senate Banking Committee hearing on deposit insurance reform.
Kenneth Kelly, chairman and CEO of Detroit-based First Independence Bank—a minority depository institution with nearly $700 million in assets—testified on behalf of the ABA. In the Q&A portion of the hearing, Kelly pivoted from a question posed by Sen. Raphael Warnock (D-GA) about the impact of reform on small community banks to take aim at credit unions.
“One issue I will bring up—and it is probably not part of this topic—is when you look at things that look like a bank, act like a bank, and can buy a bank, it should be taxed like a bank,” Kelly said. “We have a lot of inequities across the system that we need to deal with. Taxation is one of those issues that will allow small institutions to stay in small towns.”
Kelly, who is widely expected to become the next ABA board chairman, received no response from Warnock on his charge that credit unions are disrupting the banking industry.
Washington credit union advocate John McKechnie told CUToday.info that Kelly and the ABA tried to inject the issue of banks selling to credit unions into the deposit insurance hearing.
“It fell flat, but I guess you can’t blame the bank lobby for trying,” McKechnie said. “After all, there were a couple things they didn’t want to talk about. They didn’t want to talk about the financial crisis the banking industry nearly triggered in 2023 when they mismanaged their crypto-heavy balance sheets. They also didn’t want to talk about the weak regulatory oversight by bank regulators that let their problems fester. And clearly, they didn’t want to talk about a divided banking industry that can’t come up with a coherent position on transaction accounts and deposit insurance reform. So, they predictably fell back to attacking credit unions. Bravo.”
DCUC Chief Advocacy Officer Jason Stverak told CUToday.info he was not caught off guard by Kelly’s statements.
“I'm disappointed but not surprised that the banks would use this discussion about the need for deposit Insurance reform to take a veiled shot at the great work that credit unions are doing on Main Streets all across this country,” Stverak said.
As CUToday.info also reported, Peter Rice, CEO Of Hanscom FCU, also testified in front of the Senate Banking Committee on behalf of all credit unions across America and overseas. He warned that implicit protections for the largest banks create dangerous ripple effects—driving deposits away from local financial institutions, starving small businesses of credit, and undermining the defense supply chain.