Former NCUA official criticizes credit union bank purchases

A former National Credit Union Administration official this week raised concerns over credit union acquisitions of community banks.

Criticism: In separate blog posts on Wednesday and Thursday, Callahan & Associates co-founder and former NCUA Central Liquidity Fund President Chip Filson said these transactions:

• Convert firms subject to market monitoring into private entities.
• Exclude from the process credit union member-owners and are often not in their interest.
• Are often justified through generalizations, not due diligence.

ICBA Proposal: ICBA this week urged the Treasury Department to examine credit union acquisitions of community banks and proposed legislation to offset the tax losses imposed by these transactions.

Exit Fee: ICBA proposed implementing an “exit fee” that would:

• Tax credit union acquisitions of taxpaying community banks to capture the value of the tax revenue that is lost once the business activity of the acquired bank becomes tax-exempt.
• Equal 10 percent of the gross value of the acquired bank’s assets or liabilities as shown on its most recent balance sheet, whichever is greater.

Grassroots: Community bankers can continue urging Congress to hold hearings on credit union acquisitions via a customizable message to lawmakers on ICBA’s Wake Up page and recently published Wake Up Messaging Playbook.