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OP-Ed Written By: Brad Bolton and Ken Hale
The credit union tax exemption is under increasing scrutiny in Washington following a record number of acquisitions of tax-paying community banks last year, but that isn’t stopping the industry from seeking increased powers for the largest credit unions.
With federal data showing credit unions are failing to meet the needs of the high-poverty areas that they’re subsidized to serve, credit unions must focus on serving that mandate before they attempt to expand their taxpayer-funded subsidies into other areas.
Expanding tax breaks for the largest credit unions
Amid reports of credit unions abandoning their mission, concerns over the impact of taxpayer subsidies on credit union acquisitions of tax-paying community banks, and questions from Congress on reports of discriminatory lending practices, industry advocates are pushing to raise the statutory cap on the industry’s lending to member businesses.
But this is a smokescreen from an industry increasingly under the microscope. With most credit unions exempt from the 12.25% asset threshold due to their low-income designation and the vast majority of credit unions nowhere near the cap in the first place, this push by credit union advocates is designed merely to allow the largest and fastest-growing credit unions to expand their taxpayer-subsidized turf.
This lobbying push is not about unleashing lending; it’s about further unleashing taxpayer largesse for large financial institutions that are increasingly acquiring locally based, tax-paying community banks.
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