Thursday, June 18, 2020

ABA Opposes NCUA's CU Bank Acquisition Proposed Rule

In a June 15 letter to the National Credit Union Administration, the American Bankers Association (ABA) vigorously opposed a proposal that would formalize a process for credit unions to purchase taxpaying banks.

ABA opined that credit unions -- aided by their tax advantage position -- are able to outbid taxpaying banks for the same deals.

ABA contended in its letter that credit unions are aggressively targeting banks for acquisition to expand their business lines, such as originating riskier business loans.

ABA also noted that many of these acquisitions are out-of-state. For example, ABA pointed out Grand Rapids, Michigan-based Lake Michigan CU's acquisition of Encore Bank, which operated in southwestern Florida.

Moreover, ABA wrote that these large credit unions are targeting banks serving wealthier communities outside of their chartered mandate to serve low- and moderate-income individuals.

ABA further stated that large credit unions acquiring tax-paying banks should be regulated similarly to the institutions they are purchasing.

Read the letter.

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