ICBA Wants Lawmakers to ‘Wake Up’ to Credit Unions

Imagine this: You walk into your House member’s office to talk about credit union concerns.

The House member listens carefully, but then pulls out a piece of paper and begins peppering you with questions.

Bank purchases. Taxicabs. The cost of tax exemption.

The “Wake Up” campaign has struck again.

In October, the Independent Community Bankers of America launched a nationwide campaign called Wake Up, which calls on legislators and other policymakers to take note of the alleged “risky practices, costly tax subsidies and irresponsibly lax oversight of the nation’s credit unions.”

In other words, the ICBA officially declared war on credit unions across the country.

Credit union trade groups immediately denounced the effort as a mere recycling of the same, tired arguments made by their longtime banker rivals.

“The bankers are at it again: Complaining about the credit union tax status and how credit unions are using their structure and mission to serve their members,” CUNA Chief Advocacy Officer Ryan Donovan wrote in a letter to congressional offices after the campaign was announced.  “Their complaints aren’t new but that doesn’t mean they can go unanswered.”

In announcing the campaign, the ICBA, in a not-too-veiled reference to CUNA’s “Open Your Eyes” campaign, asked those policymakers to “open their eyes to the growing threats posed by these financial firms’ abandonment of their founding mission facilitated by their captive federal regulator, the National Credit Union Administration.”

“ICBA and the nation’s community banks are calling on Washington to stop pressing the snooze button and wake up to the risks of aggressive, growth-obsessed credit unions and the costs of their taxpayer-funded subsidies,” ICBA President/CEO Rebeca Romero Rainey said in announcing the campaign.

Around the time the campaign was announced, the ICBA also announced the formation of a Credit Union Task Force to tackle the issue of credit unions purchasing banks.

The Wake Up campaign has a dedicated website with a variety of features that bankers are urged to use to convince policymakers and members of the public that credit unions have unfairly used their tax exemption to become predatory competitors.

The tools on the website include:

• One-page fact sheets on such issues as how much the credit union tax exemption costs in lost revenue, and how credit unions spend their money on unrelated activities.
• Talking points providing bankers with easy-to-use information.
• Summaries of the NCUA’s proposed rules that provide bankers with the information needed to comment on them.
• A model op-ed that bankers can customize and send to their local news outlets discussing credit unions’ acquisitions of banks. The website also provides tips on how to get an op-ed placed with a news organization.
• Reports that break down credit union activities state by state.
• A state-by-state guide to challenging bank purchases by credit unions.

CUNA and NAFCU also provided members with tools for communicating with their members of Congress. And the American Bankers Association’s website also features anti-credit union tools.

The ABA even designed a separate website, explorecreditunions.com, to fight credit unions, although the association initially did not make its ownership of the site clear.

But the ICBA is demanding action. For starters, ICBA officials want Congress to hold oversight hearings.

Congress has stood by as the NCUA has expanded permissible activities, Aaron Stetter, the ICBA’s EVP of policy and political operations, said.

“The NCUA has found ever-creative ways to interpret statute or exploit loopholes,” Stetter said. “The NCUA has taken it upon itself to ignore congressional intent and enable credit unions to push the envelope, beyond any point justified by their tax exemption.”

The Wake Up campaign is designed to gather individual examples to demonstrate a pattern and practice of what Stetter said is “overreach and circumvention of the law.”

“We intend for Congress to assess the situation in a holistic manner,” he said.

The trade group has responded each time there has been a new development in the credit union industry.

When the New York Times first reported on the credit union-taxi loan debacle, the ICBA called for a congressional investigation.

“On the heels of the NCUA’s failure to prevent irresponsible credit union lending abuses in the New York taxi medallion scandal, which led to financial ruin for thousands of families, now is the time for policymakers to finally re-examine the credit union industry’s tax and regulatory subsidies,” ICBA Chairman Preston L. Kennedy and president/CEO of Zachary Bancshares Inc. in Zachary, La., said

When the NCUA issued proposed rules governing the purchase of banks, the trade group produced a summary of the rule that was intended to encourage bankers to comment on the proposal.

And when the Trump Administration released its FY21 budget, the ICBA was quick to release details on the cost of the credit union tax exemption during the next 10 years.

There are signs that the campaign has gained some traction.

In December, the House Financial Services Committee held a hearing featuring the banking regulatory agencies.

Rep. Blaine, Luetkemeyer (R-Mo.), whose family owns a community bank, asked the regulatory agency about credit unions purchasing banks.

He said he was fearful of a war breaking out.

And Rep. Steve Stivers (R-Ohio) suggested that perhaps large credit unions should be subject to the Community Reinvestment Act.

So far, the congressional hearings sought by the ICBA have not materialized.

And during the current Congress, no major threat to credit unions or their tax exemption has developed.

But Stetter said the ICBA is in this fight for the long haul.

“We have no intention of stopping until Congress wakes up and takes some action,” he said, adding, “We will continue to push this important message until Congress takes action.”