Hood Defends Bank Purchases by Credit Unions

NCUA Chairman Rodney Hood on Thursday defended the agency’s policies governing the purchase of banks by credit unions.

“Compared with the volume of bank-to-bank mergers and credit-union-to-credit-union mergers, the number of credit unions purchasing banks is very small,” Hood told the House Financial Services Committee in written testimony prepared for a hearing that featured the prudential regulators.

Ironically, Hood was not asked about such purchases during the hearing. However, he was asked about banks being purchased by credit unions during an earlier committee hearing. Rep. Blaine Luetkemeyer (R-Mo.) had questioned whether credit unions had the advantage over banks due to their tax exemption. Luetkemeyer’s family owns a community bank.

As has happened in the past, Hood faced few questions during the hearing, with House members concentrating their questioning on other banking regulators.

Hood told the committee that the agency’s Share Insurance Fund is healthy and that it will not be necessary to charge credit unions a premium now. The NCUA board is scheduled to receive a briefing on the state of the Share Insurance Fund at its Nov. 19 meeting. At the same meeting, the board will receive a briefing on an updated agency budget.

On the bank purchase issue, Hood told the committee that of the 36 NCUA-approved bank purchases by federally-insured credit unions since 2012, 13 involved banks with assets of less that $100 million. Only seven of the transactions were banks with assets of more than $250 million.

In his written testimony, Hood said credit unions are legally permitted to purchase banks and that those transactions must be approved by the FDIC and the NCUA.

“These regulations ensure the members’ equity is properly valued by an independent third party who establishes a market valuation of the credit union,” Hood said. “The purchasing bank must pay the credit union at least that amount thereby ensuring the selling members are paid a fair value for their equity.”

During the remote hearing, committee members clashed over the meaning of last week’s election.

“We are emerging from the dark days of the Trump Administration into the dawn of a new progressive America, where pro-consumer and pro-investor policies will always be first on the agenda,” committee Chairwoman Maxine Waters (D-Calif.) said as the hearing opened.

Financial Services ranking Republican Patrick McHenry disputed that notion, saying he did not see any mandate for the Left. And he added, “The tone of this hearing does not bode well for the next Congress.”