WASHINGTON—Critics of credit union acquisitions of banks are conveniently ignoring the benefits, according to America’s Credit Unions.
The trade group sought to make that point and others in a letter sent ahead of a House Financial Services Subcommittee hearing to discuss merger policies of the federal banking agencies.
While banks have been highly critical of credit union acquisitions of banks, and are sometimes referred to as mergers, the deals are nearly all cash purchases. The hearing was also held because the banking industry has been raising complaints around how long it takes regulators to sign off on merger deals, as consolidation has been ongoing in the banking industry.
‘Negative Effects’
“We have unfortunately seen the negative effects of mergers that reduce choice, reduce competition, and impair the consumer experience,” America’s Credit Unions President/CEO Jim Nussle wrote to the subcommittee. “There are some who look to deflect from those concerns by calling eyes to banks selling to credit unions, yet conveniently ignore the benefits of these transactions. These bank-credit union mergers make up a tiny fraction of total bank merger activity.”
Nussle told Congress bank-credit union mergers often involve low-income areas, which “ensures that the consumers most affected by banking deserts retain access to a local financial institution.” In addition, he argued that the sales are not forced and are taxed.
Support Urged for Lifting Burden
Nussle further called on Congress to support of legislation that reduces burdens on smaller lenders.
“As this hearing discusses the negative impacts of bank mergers to consumer choice and access to financial products, it is important to include in the conversation the impact of burdensome regulations that impose significant costs on smaller lenders that lead to the need to merge in the first place,” he concluded.
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