Before credit unions acquire banks, they should be required to receive membership approval, disclose financial terms and demonstrate how bank acquisitions affect consumers, communities and taxpayers, ABA President and CEO Rob Nichols said today in a letter to National Credit Union Administration Chairman Todd Harper.
In the letter, Nichols thanked Harper for the NCUA’s renewed focus on credit union transparency, pointing to recent reporting changes on fee practices for credit unions with more than $1 billion in assets and a new proposal on executive compensation disclosures for federal credit unions. He urged the agency to use the opportunity to increase transparency requirements for credit union acquisitions of banks.
“In recent years, the credit union industry has expanded rapidly, and the speed and scale of credit union acquisitions of banks has grown at an unprecedented rate,” Nichols said, noting that the 18 bank acquisitions by credit unions so far in 2024 have already eclipsed the record 16 set in 2022. “Taxpayers and credit union members deserve transparency and accountability, and relevant laws and regulations must be modernized to reflect today’s financial services marketplace.
Nichols also emphasized that the credit union industry has changed drastically since the passage of the Federal Credit Union Act in 1934.
“Credit unions have a statutory mission to serve those of modest means connected through a common bond in a local area,” Nichols said. “That mission of service, and their not-for-profit structure, has justified their exemption from most taxes and the Community Reinvestment Act for decades. As growth-oriented credit unions pursue new markets and commercial lending via bank acquisitions, legislators, regulators, and even some within the credit union movement have raised objections. To the detriment of credit union member-owners whose capital is used to finance these transactions, terms are rarely disclosed.”
