In an American Banker op-ed today, American Bankers Association Chair Laurie Stewart called attention to the “disturbing trend” of large, tax-exempt credit unions purchasing taxpaying community banks. “Taxpayers didn’t get a say in these deals, but they unknowingly helped subsidize them,” Stewart wrote. “And the credit unions buying those banks will be able to grow well beyond their legitimate membership boundaries, while not paying taxes that would otherwise fund the nation’s schools, roads and infrastructure.”
Stewart shared her story as a former credit union CEO who converted her institution to a taxpaying bank when it became necessary to extend beyond the “common bond” of its membership base in order to grow. As the current president and CEO of Sound Community Bank, she reflected that “I still believe we made the right call, in both the letter and the spirit of the law. I wish today’s credit union CEOs felt the same need to play by the rules.”
Stewart added that a current push by the National Credit Union Administration to allow credit unions to put outside capital on their balance sheets could give credit unions even more buying power to purchase community banks without paying federal income taxes. “Should the NCUA approve this proposal . . . then Congress should intervene,” Stewart said.