DENVER–Two bank trade group execs here are saying Colorado’s banks “don’t want or need credit unions as potential buyers” and are advocating against a bill in the state’s legislature.
In an op-ed in the Colorado Sun, Michael Van Norstrand, executive director of the Independent Community Bankers of Colorado (ICBC), and Jenifer Waller, president and CEO of the Colorado Bankers Association, said the state legislature should defeat House Bill 1351 as long as it allows credit unions to buy banks.
“For decades after the Great Depression, the mission of credit unions was to provide lending and savings services to low-income and rural households united by a common bond,” the pair wrote. “That is no longer the case. Buoyed by their status as tax-exempt nonprofits, credit unions have scooped up tax-paying banks and used their increasing profits to buy naming rights for stadiums and arenas. No longer forced by Congress to abide by strict membership requirements, credit unions now serve less modest-means clients and more middle- and upper-income customers, while at the same time, increasing executive pay, according to the U.S. Government Accountability Office (GAO).”
‘They Don’t Pay Taxes’
Van Norstrand and Waller go on to write that credit unions operate like banks with “two big exceptions: They don’t pay taxes and they aren’t required to adhere to the Community Reinvestment Act (CRA), which requires lending and investing in low- to moderate-income neighborhoods and communities of underserved individuals.”
“This lack of community investment oversight and the real potential of significant negative impacts on local communities are why the Colorado legislature should vote no on House Bill 1351 — as long as it includes the provision that credit unions have the right to buy banks,” the op-ed states. “While credit unions continue to contend that banks should have a choice to sell to them, Colorado banks have neither asked for this so-called choice nor asserted it is necessary. To be clear: We don’t want this option and don’t need it.”
‘Vast Majority’ of Loans From Banks
The duo said the 126 banks in Colorado make the “vast majority” of all loans to small businesses and farmers, particularly in small towns and rural communities where they “reinvest local dollars back into their communities.”
“Additionally, in 2023, six of the top seven corporate philanthropists in Colorado were banks. There were zero credit unions in the list of 25,” Van Norstrand and Waller wrote. “When credit unions buy banks, these positive community benefits vanish. If credit unions are not meeting these needs now, what makes anyone believe they will do better when they take over banks and aren’t subject to CRA? Squeezing out local and community banks by national and large credit unions that don’t reflect the makeup or needs of the communities where they operate will essentially eviscerate small business and agricultural lending in areas around the state.”
The op-ed goes on to state the tax-exempt status of credit unions gives them a “distinct advantage” over other buyers. It also cites the “recent scandal” involving Navy FCU over alleged mortgage lending bias as a “cautionary tale.”
‘Substantial Risks’
“Until Congress changes the rules, it is up to states to protect the ongoing investment in low- to moderate-income neighborhoods and communities of underserved individuals,” the op-ed states. “Considering the substantial risks, Colorado legislators should, at the very least, table the provision wedged into this bill that allows credit unions to buy banks as it creates substantial repercussions in communities around the state.”
As CUToday.info reports separately, the letter is similar to a letter sent by banks in New York to the state regulator.
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