WASHINGTON—Calling CUs “growth obsessed,” Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey is again calling for credit unions above $1 billion in assets to be taxed.
The ICBA leader made the statement following the announcement that $1.4-billion MAPs CU intends to acquire $342-million Lewis & Clark Bank, based on Oregon City, Ore.
“Last year marked a record number of credit union acquisitions of community banks, and the public as well as policymakers are increasingly questioning the fairness of subsidizing rapid consolidation in the community banking sector,” Romero Rainey said. “Growth-obsessed credit unions now rival banks in size, holding trillions in assets while maintaining a nonprofit status that no longer reflects their operations. Credit unions have strayed far beyond their congressional mandate, which originally granted tax-exempt status to serve people of modest means in a defined field of membership, such as employees of a single company.
“While community banks focus on financing consumers’ dreams and supporting local businesses and the agriculture sector, growth-obsessed credit unions exploit their tax exemption to finance multimillion-dollar NFL stadium naming rights deals, fuel industry consolidation by acquiring community banks, and raise funds from Wall Street hedge funds and private equity firms. Eliminating the federal tax exemption for credit unions over $1 billion in assets will help protect choice for consumers and small businesses.”
Pioneer Of CU/Bank Buys Reacts
Michael Bell, a partner and chair of the Financial Institutions Practice Group at Honigman, LLP, disagreed with ICBA's arguments.
"If you look closely at the ICBA statements, respectfully, they make no sense," Bell told CUToday.info. "To believe them you would have to believe that community banks are 100% altruistic and that credit unions are in existence to avoid taxation and recklessly spend money."
Bell said ICBA's statement that taxing large credit unions will protect choice for consumers is a "leap."
"They don’t say how because there isn’t any 'how," said Bell, who has been part of more than 75 whole-bank agreements, plus additional bank branch purchases. "Sadly, this misguided and politicized rhetoric does nothing except confuse and excite. In reality they should admit they want to tax credit unions so they can protect and enhance their ability to generate profits for their owners. In reality both community banks and credit union serve main street America. Like all major industries in America we have both for-profit and non-profit entities serving them."