Thanksgiving may be behind us, but large credit unions continue to gobble up banks around the country in a “bank buying spree,” apparently unabated in their ceaseless money-grab that flies in the face of the very justification for the tax-exempt status.
In the last two days, two of America’s largest credit unions have announced the purchase of banks with nearly $1 billion in assets.
The acquiring credit unions include Suncoast Credit Union and Arizona Federal Credit Union. Suncoast, a $10 billion behemoth that’s the largest credit union in Florida, is buying Miami-area Apollo Bank with $746 million in assets. Meanwhile, $1.6 billion Arizona Federal Credit Union is purchasing the $269 million Pinnacle Bank of Phoenix. Let’s be honest, if you are buying up banks, are you really still a credit union?
Suncoast even bragged in its press release that Apollo is the largest purchase of a bank by any credit union ever. It also points out that this is the 12th such purchase in Florida alone, underscoring an alarming trend of tax-exempt credit unions taking out tax-paying banks.
(Of course, Suncoast doesn’t mention the tax revenue that will be lost when Apollo begins hiding behind credit unions’ “we’re just a lowly not-for-profit so you can’t expect us to pay taxes” canard. Nor did they explain why a credit union founded in 1934 as the Hillsborough County Teachers Credit Union now will be making major commercial loans in a wealthy area of South Florida … certainly a mission drift from its admirable roots serving teachers in the Great Depression.)
So that’s $1 billion in bank-buying in a single day. As the old Washington saying goes, “A billion here, a billion there, pretty soon you’re talking real money.”
With that in mind, it’s more than time for credit union regulators to shed light on large credit unions’ unbridled bank-buying spree. Fueled by piles of cash stemming from the fact that they pay no federal income taxes, these credit unions are exploiting the system to grow their membership bases and gather assets.
Allowing this to continue unchecked is a mistake that comes at the expense of every taxpayer in the country and every small credit union playing by the rules. Large credit unions are out-of-bounds, and the NCUA must act like the regulator they are supposed to be and blow the whistle.