In a letter to the National Credit Union Administration today, ABA vigorously opposed a proposal that would formalize a process for credit unions to purchase taxpaying banks, a practice “growing at an alarming rate” in recent years. The association pointed out several concerning trends that have emerged from recent credit union acquisitions of community banks, noting that large, tax-exempt credit unions are seeking out smaller banks for acquisitions, often in saturated markets where consumers already have plenty of financial options.
“ABA believes that credit unions are aggressively targeting banks for acquisition to expand their business lines and growth their field of membership outside of their chartered mandate to serve low- and moderate-income individuals,” the association said. In addition, ABA noted that “further aided by their tax advantage, credit unions are employing an acquisition strategy that outprices taxpaying banks for the same deals.”
ABA added that “these actions raise severe policy and regulatory concerns given the expansion of large credit unions and the broader risks the impact would have on the $1.5 trillion credit union industry,” and urged NCUA to “reevaluate its supervisory responsibilities and work with Congress on credit union charter and tax preference reforms.”