ICBA renews call for congressional hearings on credit union-bank deals

The Independent Community Bankers of America on Thursday once again called on members of Congress to hold hearings into credit unions’ acquisitions of community banks.

The group’s request came on the heels of an announcement that VyStar Credit Union in Jacksonville, Fla., had agreed to purchase the $1.6 billion-asset Heritage Southeast Bank in Jonesboro, Ga. Heritage Southeast would be the biggest bank to be sold to a credit union, and the deal would give VyStar a foothold in the Atlanta area.

"While community banks have accounted for more than 60% of Paycheck Protection Program loans to lead the economic response to the pandemic, the dated credit union tax exemption and faulty National Credit Union Administration oversight are claiming another of these essential local institutions,” ICBA President and CEO Rebeca Romero Rainey said in a press release.

“The current rash of taxpayer-funded credit union acquisitions exacerbates industry consolidation, shrinks state and local tax revenues, limits the reach of the Community Reinvestment Act and again shows that tax-exempt credit unions have become virtually indistinguishable from taxpaying commercial banks,” she added.

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Along with its request for congressional hearings, the ICBA has asked the Government Accountability Office to commission a study “on the evolution of the credit union industry and [NCUA] supervision.”

While credit union groups did not directly respond to the association's requests, they have touched on the subject recently. In a March 26 letter on the subject to members of the Senate Finance Committee and House Ways and Means Committee, the National Association of Federally-Insured Credit Unions pushed back against bankers’ arguments, suggesting that the ICBA is looking to solve a problem that doesn’t exist.

“It is important to recognize that bank-credit union mergers are voluntary, market-based transactions that require a community bank’s board of directors to vote on selling to a credit union. These are not ‘hostile’ takeovers,” Brad Thaler, NAFCU’s vice president of legislative affairs, wrote in the letter.

“The bank is the one that ultimately makes the decision to sell to, and merge with, a credit union," Thaler added. "Perhaps, ICBA’s concerns would be better addressed by sending a letter to their members asking why they are choosing credit unions over banks.”

This is not the first time the ICBA has requested these hearings, and there is little reason to expect lawmakers would be more responsive this time around.

Several pieces of legislation have been introduced in recent weeks that would improve the operating environment for credit unions, including a bill that would make it easier for credit unions to expel disruptive or abusive members. Another bill, introduced in March, would provide some credit unions with relief from limits on commercial lending.