WASHINGTON—Another credit union purchase of a bank is drawing fire again from the Independent Community Bankers of America (ICBA).
As CUToday.info reported, the $8.1-billion MIDFLORIDA Credit Union has agreed to buy $924-million Prime Meridian Bank.
“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. This is the third bank that this growth-obsessed credit union has acquired in the past five years,” ICBA President and CEO Rebeca Romero Rainey stated.
“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,” Romero Rainey said. “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.”
America's Credit Unions Responds
America's Credit Unions President and CEO Jim Nussle fired back Tuesday, saying 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."
DCUC: Same Tactic
The Defense Credit Union Council stated the ICBA’s latest outcry is just the "same old attack wrapped in the same old hypocrisy."
"Credit unions put people over profits and remain steadfastly committed to our communities — we’re member-owned cooperatives serving with integrity and a public service mission, not chasing windfall profits for shareholders," said DCUC Chief Advocacy Officer Jason Stverak. "If a community bank chooses to sell to a credit union, it’s because they trust we’ll continue to put their customers and community first, preserving local branches and jobs instead of stripping them for profit. And the ICBA’s complaint about an ‘unfair’ tax advantage conveniently ignores how many banks dodge taxes themselves by electing Subchapter S status and using accelerated depreciation to erase their tax bills.
"It’s a double standard: banks exploit every tax break available while attacking credit unions for a congressionally granted tax status that helps our members serve the public," continued Stverak. "We make no apologies for putting our members and communities ahead of corporate profits — that’s the entire point of credit unions, and it’s exactly why we’ll keep fighting to put people first.”