Dive Brief:

• The Independent Community Bankers of America (ICBA) launched a campaign on Monday aimed at ending the “risky practices, costly tax subsidies, and irresponsibly lax oversight” of credit unions. ICBA said its “Wake Up” campaign will feature legislative and regulatory proposals, comprehensive research, grassroots advocacy campaigns and customizable resources to help community banks call for policy makers to review credit union practices.

• “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 and CEO Rebeca Romero Rainey said in a statement.

• The campaign has drawn criticism from the Credit Union National Association, which issued a statement refuting many of the ICBA’s claims.

Dive Insight:

Banking trade groups have long called for credit union reform, often claiming the federally subsidized financial institutions have diverged from their mission to serve low-income households.

In a statement, Rainey slammed the National Credit Union Administration (NCUA), accusing the credit union regulator of pursuing an aggressive growth agenda.

“With credit unions abandoning their founding mission in the name of expansion and risky lending, it is long past time for Congress to level the playing field between community banks and credit unions while reining in the National Credit Union Administration’s expand-at-all-costs agenda,” she said.

The NCUA did not respond to Banking Dive’s request for comment.

Banks have taken issue with the growing trend of credit unions acquiring community banks.

Credit unions have acquired 21 U.S. banks since 2018, compared with 12 acquisitions in the prior five years, according to data from S&P Global Market Intelligence.

ICBA claims the trend is worsening industry consolidation, reducing tax revenues for local communities and furthering credit unions’ "unbridled encroachment into full-service banking."

The trade group also referenced the New York City taxi medallion scandal, accusing the NCUA of failing to properly regulate credit unions.

"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 Kennedy, president and CEO of Zachary Bancshares Inc., said in a statement.

"With credit unions posing so many risks to their members, the financial system and taxpayers nationwide, Washington needs to wake up and address the credit union industry gone rogue," Kennedy said.

In a response to the ICBA’s campaign, CUNA issued its own statement, refuting claims that credit unions have strayed from their mission, engage in risky behavior and are growth obsessed.

"Widespread bank anti-consumer behaviors include saddling millions of consumers with toxic mortgages they couldn’t afford — precipitating the global financial crisis and the Great Recession," the trade group said in an emailed statement. "In fact, there have been a recorded $260 billion in bank fines since 2009."

Addressing the ICBA’s "expand-at-all-costs" claim, CUNA pointed to the size of the banking industry, adding that banks had a 92.5% market share of total financial institution assets at the end of 2018.

JPMorgan Chase, Bank of America and Wells Fargo individually control more assets than the total assets in all 5,400 U.S. credit unions, the trade group said.

"Banking groups consistently devote valuable resources toward unwarranted attacks on a movement that prides itself on providing value and financial benefit to American consumers," CUNA Chief Advocacy Officer Ryan Donovan said in a statement. "This is not the first and it won’t be the last time the credit union mission and structure is brought into question."