DES MOINES, Iowa–After some confusion over whether the sale of a bank to a credit union had occurred or whether it had been blocked by a regulator, some of the parties involved continue to exchange criticisms of each other.
As CUToday.info reported here, the Iowa Division of Banking announced its intent to block the sale of First American Bank’s remaining Iowa-based assets and branches to Green State Credit Union, a move that was hailed by at least one bankers’ group. The problem: the deal had already closed and the state regulator lacked any real authority in the transaction.
Before the status of the sale was clarified, the Independent Community Bankers of America (ICBA) hailed the decision. The bank trade group has been increasingly outspoken in its criticism of CU acquisitions of banks.
Meanwhile, many in credit unions suggested politics was at work, as Iowa Superintendent of Banking Jeff Plagge is a former bank CEO, former chairman of the Iowa Bankers Association and former chairman of the American Bankers Association.
‘Deal Remains Consummated’
GreenState Credit Union issued a statement saying it had already received the necessary approval from the FDIC, NCUA and the State Credit Union Division to close the deal.
“With all applicable regulatory approvals for the purchase in hand, our stance is that the deal remains consummated and will not be undone,” the credit union said in a statement. “We consider this matter behind us and will continue with business as usual. We are extremely excited about the joining of these two Iowa-based institutions and the positive outcomes it will produce for Iowans.”
In a written statement to the Messenger News, Iowa Credit Union League President Murray Williams said, “It is shameful for the superintendent of the Iowa Division of Banking to inject politics and personal gain into a legal business transaction,” said Murray Williams, president and CEO of the Iowa Credit Union League. “He serves as the regulator and regulated for a bank he owns and leads,” Williams said.
Northwest Bank has branches in the Des Moines and Fort Dodge markets, according to the Messenger News, which reported those branches compete with the branch locations that First American Bank chose to sell to GreenState Credit Union.
‘Blatant Conflict of Interest’
“Mr. Plagge’s attempt to halt this business transaction would benefit his bank and himself personally,” Williams said in the statement. “This is blatant conflict of interest that Mr. Plagge should have disclosed.”
Shauna Shields, bank bureau chief for the Iowa Department of Banking, told the Messenger News Iowa Code allows for the superintendent to be an owner and/or employee of entities regulated by the Iowa Division of Banking. Furthermore, it’s required the superintendent to be a banker.
“The fact the code requires the superintendent to be a banker who can be involved in a bank while serving as superintendent indicates the Iowa Legislature concluded this market impact is an acceptable trade-off in exchange for the expertise a banker brings to the position,” Shields told the publication.