Following ICBA advocacy, FDIC includes credit unions in merger guidance

As advocated by ICBA, the FDIC 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 tax-exempt credit unions.

Policy Update: The FDIC statement of policy on agency reviews of bank mergers says:

  • Transactions involving a credit union may require additional information about their impact on the convenience and needs of affected consumers because credit unions are exempt from the Community Reinvestment Act.

  • Typical concentration measures such as the Herfindahl-Hirschman Index might be insufficient in rural markets, particularly those served by credit unions, Farm Credit System institutions, and other nonbanks.

ICBA Advocacy: In a June comment letter, ICBA called on the FDIC to expand the scope of its bank merger reviews to include credit unions because their diluted field-of-membership restrictions no longer limit the ability of credit unions to attract customers, especially given their tax-exempt status.

Latest ICBA Polling: Following the FDIC’s ICBA-advocated policy update, ICBA released new polling data showing Americans increasingly support a congressional review of credit union policy. According to the polling of U.S. adults conducted by Morning Consult:

  • 61% say Congress should investigate whether credit unions should be able to acquire banks given credit unions’ tax and regulatory exemptions.

  • 55% say policymakers should consider charging acquiring credit unions a fee on acquisitions of tax-paying banks to capture part of the lost tax revenue.

  • 54% say Congress should investigate whether the credit union tax exemption is still warranted.

Previous Results: ICBA recently released results showing Americans are growing increasingly uneasy with credit unions’ regulatory exemptions and support reforms to policies that arbitrarily favor these tax-exempt financial firms.

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