STEVENSON, Wash.–During remarks to a meeting of bankers here, Federal Reserve Gov. Michelle Bowman suggested that credit unions could be the beneficiaries of increased regulatory scrutiny of bank mergers should credit union acquisitions of banks not be held to the same level of review as traditional bank combinations.
Speaking to the joint annual convention of banking associations from Idaho, Nevada, Oregon and Washington, Bowman touched on numerous issues, including the pace of regulatory reviews related to bank mergers and acquisitions.
‘Not Clear’
“At the same time some federal regulatory agencies are imposing more onerous requirements, credit unions have increased their acquisitions of banks,” Bowman said. “While this could solve some succession planning concerns, it is not clear how these acquisitions will ultimately impact the banking system going forward. Could these acquisitions reduce the availability of certain products and services? Will these institutions have the same incentives to serve all of the consumers in a particular community? If there are fewer banks and more credit unions, how will this data impact the competitive analysis of traditional banks merging?”
Expanding FOMs
Historically, Bowman told the assembled bankers, credit unions have had limited membership requirements and have not engaged in the same wide range of activities as banks.
“But in recent years, their memberships have expanded, and they are offering more of the same products and services that banks provide,” Bowman stated. “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.”
Bowman’s full remarks can be found here.