Community Bankers Like Selling to Credit Unions, CUNA Argues in New 'White Paper'
Ahead of "Hike the Hill," the ICBA sends a list of talking points and questions it wants congressional officials to ask credit union leaders.
Community bankers understand the benefits of selling their institutions to credit unions even if their trade groups don’t like the practice, CUNA Chief Economist Mike Schenk wrote in a “white paper” released this week during CUNA’s Governmental Affairs Conference.
“Instead of cultivating consumer financial wellbeing and strong neighborhoods, the bank trades have once again shown their true colors — fighting turf wars that will only benefit bank trade groups and a small number of very large banks if successful,” Schenk wrote.
The bank-credit union feud intensified this week, as credit union officials prepared to visit Capitol Hill.
The Independent Community Bankers of America is sending congressional offices a list of questions they would like staffers and members of Congress to ask credit union representatives when they visit.
In his paper, Schenk said banking trade groups ignore the benefits of sales to credit unions.
“Bank sales to credit unions provide significant benefits to bank owners because they provide cash proceeds rather than stock ownership in another institution as is very often the case when banks sell to other banks,” he wrote.
But, a recent CUNA survey of community bankers who sold institutions to credit unions also showed that employee retention and “cultural fit” played roles in their decisions.
Schenk also said that “recent literature is replete” with examples of big banks purchasing smaller institutions and closing branches that do not meet strict profit criteria.
He also said credit union transactions involve smaller, low-profit institutions that most other banks are not interested in purchasing.
In their document, ICBA officials are urging congressional staff and members who meet with their credit union constituents to ask if bank purchases truly are free-market transactions, since credit unions are tax exempt.
They also want credit union officials to be asked whether their institutions really serve “people of modest means” and why they are pushing the NCUA’s subordinated debt proposal.
Read the full “Bank Sales to Credit Unions” report here.
Read the ICBA’s communication to congressional offices here.