There is no question that the last two years have been hard for just about everyone. Millions of people have faced some sort of income interruption, whether due to fewer shifts, a lost job or the illness or death of a loved one. Inflation is at a four-decade high with rising food, gas, and housing prices squeezing consumers’ wallets. And supply chain issues have left many store shelves bare.
There is ample opportunity for local bankers to help lift their communities from the economic doldrums, but far too many are packing their bags, choosing to abandon their communities rather than striving to advance them. Between 2008 and 2020, banks closed 14% of branches nationwide — over 13,000 branches total.
The good news, if there is any, is that a small number of these bankers are engaging credit unions to ensure that their community continues to have locally provided financial services options.
That has banker lobbyists at the American Bankers Association, the Independent Community Bankers of America and their state affiliates apoplectic, kvetching to Congress, regulators and anyone else who will listen that bank-to-credit union sales somehow violate the spirit of the credit union tax exemption.
One of the more bizarre parts of this misguided argument is that not-for-profit credit unions are taking tax-paying banks off the market, harming the economy. What they don’t share is that nearly half of the banks that sell to a credit union paid no taxes in the year preceding their sale, whether because they were not profitable, invested in tax-exempt vehicles, or received other exemptions from state and federal taxes. That’s to say nothing about the 24.5% tax paid on the total transaction value in many of these sales. Each of these transactions generates revenue for the government — and in many cases it is revenue the government wouldn’t otherwise have received.
We all know this isn’t about lost tax revenue for a sector that shamelessly argues to tax not-for-profit cooperatives while at the same time engaging lawmakers to maintain their own pass-through tax advantages and to reduce corporate tax rates. But then, the bank lobbyists have never let the facts get in the way of spin.
The problem is that their smoke and mirrors tactic is harmful. Some state regulators have swallowed the bankers’ misleading rhetoric hook, line and sinker, blocking bank-to-credit union transactions that would otherwise continue to ensure — or even grow — access to dependable, financial services. After all, when a bank sells to a credit union, the branches almost always remain open; the bank staff generally keep their jobs; the customers become credit union members; and the credit union can do even more to advance the community. Everyone wins, except the bank lobbyists.
At a time when, according to a recent Pew Research Center study,
It’s a shame that the banker lobby continues to resort to this. I’ve seen firsthand what a vibrant, responsible and forward-looking financial services industry can do to improve the lives of people in every kind of community across our country. Having advocated for credit unions for nearly two decades, I know it is exactly what policymakers want to see more of in their communities.
This month, more than 4,500 credit union advocates came to Washington to discuss the future of financial services with Congress and regulators. The difference between our fly-in and the banker fly-ins later this year is that we will be fostering a positive, forward-looking discussion focused on improving the financial well-being of our 130 million credit union members, and how credit unions can be there to meet the needs of the next 130 million members. The bankers will try to convince lawmakers that the government loses money when a bank decides to sell to a credit union, instead of what communities lose.
