A new column in Axios by Felix Salmon probes why credit unions are buying banks at a record pace, and as a consequence, have possibly lost sight of their nonprofit missions.
Credit unions have acquired $7.2 billion of bank assets so far this year, Salmon noted, citing S&P Global figures. One driver of the trend is the fact that credit unions enjoy less regulatory scrutiny than banks. “In other words: It’s just easier to be a credit union than a bank, so that’s the natural choice for bank CEOs to make,” Salmon wrote.
“The key question here is whether growing via acquisition means that a credit union has lost sight of its nonprofit mission—or whether such acquisitions are a sign it’s pursuing that mission, of providing high-quality banking services to as many members as possible, as aggressively as it can,” said Salmon.
Salmon also noted that credit unions are constrained in that they can only offer banking services to specific fields of membership, “but sometimes those fields of membership can be ridiculously large.” He cited examples such as Global Credit Union, “which accepts for members ‘people who live, work, worship, or attend school in Alaska, Washington, California’s San Bernardino County, Arizona’s Maricopa County, and Idaho’s Kootenai County,’ just for starters.”
