With credit union acquisitions of banks hitting their highest level yet this year, lawmakers on the House Financial Services Committee raised concerns about that trend during a congressional hearing on Wednesday examining oversight of financial regulators.
Sixteen bank acquisitions have been announced so far this year – nearly double the number of 2018 – for a total of 32 deals since 2013. For comparison, more than 1,700 bank-on-bank transactions have taken place since then, including well over 200 this year alone.
But the hearing came just one day after Suncoast Credit Union in Florida announced its
"I'm fearful of a war beginning to break out," Congressman Blaine Luetkemeyer (R-MO) said Wednesday.
A recent report from the Credit Union National Association found that bank closures created 86 banking deserts between 2008 and 2016. The trade group said that emphasizes the benefit CUs provide when bringing financial services to new markets as part of a bank acquisition.
“If it weren’t for credit unions acquiring some of these banks, then the community would be left without a financial institution — it would leave them vulnerable to pernicious payday lenders,” Hood said. “And at the end of the day, the bank does get to select who that acquiring entity is.”
Hood announced earlier this fall that NCUA will
Hood responded that these transactions are voluntary and that they must be approved by both the FDIC and the NCUA.
Huizenga’s campaigns have received financial support from both bank and credit union lobbying groups.
Huizenga also questioned Jelena McWilliams, the chairman of the Federal Deposit Insurance Corp., who testified alongside Hood and Randal Quarles, vice chairman of the Federal Reserve. The Michigan Republican raised concerns about the disappearance of community banks, and McWilliams suggested CUs enjoy benefits their for-profit counterparts don’t share as a result of banks’ tax status and being subject to the Community Reinvestment Act.
“So I think [what] you’re getting to is that there might be a problem,” Huizenga asked.
“[What] I’m getting to is that the playing field may not be exactly level.” McWilliams answered.
Hood’s colleague, board member Todd Harper, has in the past pointed to a need for consistency across federal banking regulators and recently
Beyond issues related to credit unions, much of the hearing was devoted to
This story was updated at 3:30 P.M. on Dec. 5, 2019.