Pub.16 2021-22 Issue 2

NEBANKERS.ORG 10 WASHINGTON UPDATE Rob Nichols, President and CEO, American Bankers Association Time’s Up: Congress Must Stop Credit Union Purchases of Taxpaying Banks A FTER TAPERING OFF DURING THE pandemic, the trend of credit unions buying taxpaying community banks is back – and credit unions are becoming more aggressive than ever in their pursuit of acquisition targets. The first half of 2021 has already seen two precedent- shattering deals: Jacksonville, Florida-based VyStar Credit Union’s acquisition of a $1.6 billion Georgia bank is by far the largest purchase of a bank purchase by a credit union to date. And more recently, the announcement by Iowa-based Green State Credit Union that it would simultaneously acquire not one but two community banks in the Midwest. Acquisitions like these are a bad deal for taxpayers, a bad deal for communities, and a bad deal for consumers. They erode state and federal tax bases at a fundamental level, diverting funds away from essential infrastructure projects and other government initiatives. Perhaps even more egregiously, in the case of VyStar – which paid an 80% premium on its acquisition transaction – is the fact that the firm’s tax-exempt status means American taxpayers effectively subsidized the purchase. Analysis by the Government Accountability Office shows that credit unions are now serving more middle- and upper-income customers rather than customers of “small means” – the congressional mandate behind the credit union tax exemption. Rather