New op-ed initiative takes aim at credit unions over community bank acquisitions, tax exemptions.
One day soon, credit union officials may be in for an unwelcome surprise when they open their newspaper or sign on to a local news website.
They may find an attack on their credit union.
The community bank advocacy organization Independent Community Bankers of America (ICBA) is circulating a customizable op-ed bankers may use to “raise awareness of credit union acquisitions of community banks.” The contents of that op-ed are available only to ICBA members. It is accessible through Microsoft Word, allowing for it to be personalized and then submitted to local news media.
That appears to be exactly the route ICBA Chairman Brad Bolton took in a recent column in Business Alabama, a magazine that covers business in the state. A version of that op-ed additionally appeared in American Banker.
Bolton is also president/CEO of Community Spirit Bank in Red Bay, Alabama.
What Exactly is the ICBA Asserting?
“Credit union purchases of community banks in Alabama and nationwide is an alarming trend because credit unions don’t pay taxes, unlike their tax-paying community bank targets,” Bolton wrote, adding the consequences of such purchases are important to local communities that rely on tax revenue.
He claimed displacing community banks with credit unions also expands the portion of the financial services industry that is exempt from the Community Reinvestment Act, since credit unions are not subject to that law.
Bolton argued further such purchases in Alabama take away a vital source of small business loans in the state, before calling on Congress to hold hearings on the credit union tax exemption.
Part of a Larger Initiative
The op-ed appears to be a cog in the ICBA’s broader “Wake Up and Take Action” campaign in which the trade group is asking policymakers and the public to “wake up” to what they say are risky practices, costly tax benefits and lax oversight by the National Credit Union Administration (NCUA).
While the ICBA does not explicitly state this, the effort may be a takeoff on the recent “Open Your Eyes to a Credit Union” campaign launched by the Credit Union National Association (CUNA). In recent months, the ICBA has also produced a digital ad making its case.
How Will Credit Union Groups Respond?
Credit union trade groups have typically countered such censure by contending their financial institutions are greatly beneficial to their communities. They also argue that while credit unions may be exempt from income taxes, they still do pay a variety of other taxes.
The groups likewise emphasize that while banks are for-profit institutions, credit unions are member-owned financial institutions.