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NAFCU sets the record straight on CU, bank mergers in response to banker attack
NAFCU President and CEO Dan Berger Thursday wrote to Treasury Secretary Janet Yellen to clarify falsehoods and inaccuracies about credit union and bank mergers hurled by the Independent Community Bankers of America (ICBA).
In the letter, Berger explained that bank and credit union mergers are voluntary, market-based transactions that require a community bank's board of directors vote. "To be clear, the bank makes the ultimate decision to sell to, and merge with, a credit union," wrote Berger. "These transactions are a far cry from 'hostile takeovers.'
"ICBA’s complaints about the 'weaponization' of the credit union tax exemption are nothing more than a trojan horse, distracting from their real aim—eliminating competition for community banks," added Berger.
Berger called on the Treasury to ignore these efforts, as credit unions provide exceptional products and services for their members and communities, while community banks put shareholder profits first.
While outlining the credit union difference, Berger also explained the benefits of the credit union tax exemption.
"What is most alarming is that banks continue to attack the credit union tax exemption while enjoying exorbitant tax breaks themselves," explained Berger. "The banking industry received tens of billions of dollars in annual tax breaks from the Tax Cuts and Jobs Act (TCJA). The estimated benefit of the banking industry from the lower tax rates under the TCJA was about $20 billion in 2020. For community banks alone, the estimated benefit from lower tax rates under the TCJA amounted to $2.8 billion in 2020.
"Additionally, ICBA conveniently fails to point out that over one-third of all banks are Subchapter S corporations and do not pay a dime in corporate income taxes," concluded Berger. "These annual tax breaks for banks far outpace any tax revenue that would be gained from the proposed exit tax on credit union and bank mergers."
Read Berger's full letter here. NAFCU will continue to set the record straight by providing the facts on the benefits of the credit union tax exemption and more.