With the rumor circulating about another credit union acquiring a Wisconsin bank, WBA reached out to the Wisconsin Congressional Delegation to point out the obvious; taxpayers should be livid every time a credit union leverages their tax-exemption to purchase a tax-paying bank. Just last month, Verve Credit Union in Oshkosh announced the seventh Wisconsin-related credit union acquisition of bank assets over the last five years. This loss of tax revenue from credit unions harms our local schools, hospitals, county roads, and other important infrastructure projects that are necessary to sustain local communities. There are 103 Wisconsin banks (combined assets of $13,815,978,000) that currently fit the profile of the type of acquisition credit unions are looking at in Wisconsin. With more potentially on the horizon, lawmakers should see the writing on the wall.
This is the text used in a letter that was sent to all members of Wisconsin's Congressional Delegation.
The recent surge in credit union acquisitions of community banks across the country is a disturbing trend that promises a negative impact on taxpayers here in Wisconsin and nationwide. Just last month, Verve Credit Union in Oshkosh announced the 7th Wisconsin-related credit union acquisition of bank assets over the last five years. These transactions include whole bank and/or multiple branch acquisitions. There are rumors of at least one more acquisition coming in the near future.
There is a profile of the type of acquisition credit unions are looking at in Wisconsin:
- Wisconsin banks with $250 Million or less in assets
- Currently, there are 103 banks that fit the profile for credit union acquisition.
- Those banks have combined assets of $13,815,978,000.
This should give pause to all taxpayers, considering every credit union purchase of a community bank diminishes tax revenues and further solidifies a publicly subsidized sector of the financial services industry. Wisconsin banks paid $491 million in income taxes in 2017, while credit unions paid $0. This loss of tax revenue from credit unions harms our local schools, hospitals, county roads, and other important infrastructure projects that are necessary to sustain local communities.
The inequity of these deals is exacerbated by the fact that credit unions are not subject to the full set of regulations that community banks face, including Community Reinvestment Act rules that encourage financial institutions to meet the needs of low- and moderate-income communities. For example, according to state Home Mortgage Disclosure Act data only 8% of Wisconsin credit union mortgages were originated to low-income individuals. 42% of mortgages were originated to the upper-income bracket. Moreover, 60 HMDA reporting credit unions did not make a single loan to a low-income individual.
The current rash of credit union acquisitions is a threat to local taxpayers and yet another indicator that large tax-exempt credit unions have become virtually indistinguishable from taxpaying commercial banks. Should a tax subsidized entity be able to use those savings to acquire a tax paying institution? It’s time for our representatives to take action on this unbalanced arrangement and join many other countries around the world in leveling the financial services sector’s tax and regulatory responsibilities.
Rose Oswald Poels
President and CEO
Wisconsin Bankers Association