The American Bankers Association’s longstanding opposition to credit union acquisitions of taxpaying community banks was captured in a story in American Banker last week exploring the concerning trend. A total of 16 such acquisitions were announced in 2022—tying a 2019 record.
ABA has long called on Congress to address the unequal tax treatment of banks and credit unions and has called out these acquisitions, noting that they ultimately reduce the tax base that supports local communities and national needs, disadvantage low- and moderate-income communities and threaten safety and soundness and consumer protection. A handful of states have moved in recent years to address these purchases through regulatory or legislative action, American Banker noted.
“At the end of the day, these acquisitions demonstrate that credit unions are now overtly leveraging their tax subsidy to gain a competitive advantage over community banks,” said ABA VP Robert Flock, who was quoted in the article. “That’s not what Congress intended when they exempted credit unions from federal taxes, and we urge lawmakers to closely examine this troubling trend.”
The story also highlighted data provided by ABA’s economic research team that found that member business loan ratios at credit unions that have made bank acquisitions is 12.1%, much higher than the industry average of 5.9%, and butting up against the statutory member business lending cap for credit unions of 12.25%.