WASHINGTON—The Independent Community Bankers of America (ICBA) testified before Congress Wednesday, and they did not miss the chance to attack credit unions’ tax exemption.
ICBA President and CEO Rebeca Romero Rainey testified before the House Financial Services Committee during its hearing titled Make Community Banking Great Again.
“The new Congress and administration present an opportunity to transform the regulatory environment to support community banking and economic growth in rural, suburban, and urban markets,” Romero Rainey stated. “We look forward to working with the Financial Services Committee in the coming weeks to leverage and amplify the unique and extraordinary value our great community banks bring to local economies.”
Noting that community banks reinvest local deposits into local credit for the communities they serve—with more than 1,000 community banks in operation for over a century—Romero Rainey cited the importance of the industry’s outsized small-business and agricultural lending as well as its “responsible” innovation.
CU Tax Break Targeted
Turning to the new Administration’s efforts to rewrite the tax code this year, Romero Rainey stated in her complete, prepared remarks that tax reform should include “a review of the tax exemption enjoyed by today’s multi-billion-dollar credit unions. These institutions have outstripped their public mission and tax-exempt purpose and are now leveraging their tax exemption to purchase tax-paying community banks. The pace of these acquisitions in recent years is driving the consolidation of financial services across all markets, to the harm of consumers and small businesses.”
Romero Rainey also stated in her prepared remarks that the CU tax exemption warrants special scrutiny and that the “outmoded subsidization of credit unions is an inefficient use of taxpayer dollars and ripe for repeal…ICBA urges Congress to restore balance to the American financial services marketplace and help close the growing budget deficit by re-examining the 100-year-old credit union tax subsidy.”
Punchbowl News recently reported ICBA may be changing its strategy regarding credit unions’ tax exemption. The news outlet said the ICBA is expected to advocate for lawmakers to limit the tax exemption to credit unions worth less than one billion dollars, rather than a wholesale end to the tax benefit.
Concluding her testimony, Romero Rainey also called on Congress to:
- Advance tiered regulations through a comprehensive update of regulatory thresholds
- Provide relief from the Consumer Financial Protection Bureau’s 1071 small-business data collection and reporting requirements through House Small Business Committee Chairman Roger Williams’ 1071 Repeal to Protect Small Business Lending Act
- Promote the formation of de novo community banks through Rep. Andy Barr’s Promoting New Bank Formation Act (H.R. 478)
- Promote and strengthen community development financial institutions and minority depository institutions
- Strengthen financial consumers by ending mortgage “trigger leads” harassment, closing the industrial loan company loophole, helping community banks eliminate check fraud, opposing credit card routing mandates, protecting consumer data from the CFPB’s 1033 rule