Credit unions may ultimately benefit from increased regulatory scrutiny of bank mergers if credit union acquisitions of banks are not held to the same level of review, Federal Reserve Governor Michelle Bowman said today. Speaking at the joint annual convention of the Idaho, Nevada, Oregon and Washington bankers associations, Bowman disputed claims that banking agencies “rubber stamp” bank merger applications by pointing to the number of withdrawn applications and their lengthy processing times. Moreover, some proposed regulatory reforms would likely make the merger application process slower and less efficient, she said.
“At the same time some federal regulatory agencies are imposing more onerous requirements, credit unions have increased their acquisitions of banks,” Bowman said, adding that it was not clear how credit union acquisitions would affect the banking system.
“Historically, credit unions have had limited membership requirements and have not engaged in the same wide range of activities as banks,” Bowman said. “But in recent years, their memberships have expanded, and they are offering more of the same products and services that banks provide. Yet, unlike banks, credit unions are not required to meet the requirements of the Community Reinvestment Act or other laws that apply to banks. As some prudential regulators continue to increase the regulatory scrutiny of bank M&A, it may increase the incentives for credit unions to acquire banks if there are fewer delays and more regulatory certainty related to those transactions.”
