Nonprofit credit unions are buying record numbers of for-profit banks. Until recently, a nonprofit couldn't own a for-profit, but tax changes in recent years have changed the dituation.
As the Independent Community Bankers of America (ICBA) recently wrote: "Credit unions are increasingly exploit their federal tax exemption to acquire tax-paying community banks, the need for policymakers to re-examine their tax status is urgent. Action is needed now to preserve community banks and the communities that depend on them, ensuring the continued vitality of the relationship-based banking sector that has supported Main Street America for generations.
Credit unions pay no tax to operate the same business that was taxable the day before once they acquire a bank. As public scrutiny of these inappropriate deals and the number of credit union purchases of taxpaying community banks have raced past record highs, policymakers must protect local communities by ending the credit union tax exemption,” Rainey said. As more than 20% of bank deals this year have been credit unions leveraging their tax exemption to purchase banks, the media is taking note:
Axios: Why credit unions are buying banks.
American Banker: Credit unions extend bank-buying spree.
Credit Union Today: Citing exec pay, sports deals, 'lavish' HQs, bank group tells Congress there are new reasons to revoke CU tax exemption.
Op-ed: Confessions of a credit union executive turned community banker.
Op-ed: Stop letting credit unions buy community banks."
As Axios recently concluded: Credit unions have many advantages over banks. They pay less in taxes and don't need to deliver profits to shareholders.They also have less of a regulatory burden — they aren't subject to Community Reinvestment Act requirements, for instance, and their National Credit Union Share Insurance Fund is in healthier shape than the FDIC's Deposit Insurance Fund.
Axios: Why credit unions are buying banks.
American Banker: Credit unions extend bank-buying spree.
Credit Union Today: Citing exec pay, sports deals, 'lavish' HQs, bank group tells Congress there are new reasons to revoke CU tax exemption.
Op-ed: Confessions of a credit union executive turned community banker.
Op-ed: Stop letting credit unions buy community banks."
