WASHINGTON—Another credit union acquisition of a bank--once again--draws fire from bankers.
Following the $7-billion DFCU Financial’s deal to buy $794-million Winter Park National Bank, the 20th such deal of the year, Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey said the latest acquisition “is yet another example of a tax-exempt credit union crossing state lines to acquire a tax-paying community bank—further expanding the federal tax exemption for more than $2 trillion in credit union assets and displacing trusted providers of credit in local communities. With this year’s record number of transactions continuing to grow, it is no surprise that policymakers and the public are increasingly scrutinizing antiquated credit union policies and practices.
“After the FDIC recently approved a new statement of policy on bank mergers that for the first time explicitly states that additional scrutiny may be needed for deals involving credit unions — as advocated by ICBA — Federal Reserve Governor Michelle Bowman said regulatory disparities between community banks and credit unions distort competition,” continued Romero Rainey. “Further, Consumer Financial Protection Bureau penalties against VyStar Credit Union for harming consumers through its botched rollout of a new online banking system exemplify the risks posed by the National Credit Union Administration’s inability to examine credit union third-party service providers, as recognized by NCUA Chairman Todd Harper.”
Romero Rainey added that ICBA polling conducted by Morning Consult shows 61% of U.S. adults say Congress should investigate whether credit unions should be able to acquire banks.
“It’s time for policymakers to respond to this trend with a comprehensive federal solution,” she said. “ICBA and community bankers continue calling for Congress to hold hearings and to consider an ‘exit fee’ on credit union acquisitions of tax-paying banks to capture lost tax revenue resulting from these deals.”