Concerns over potential negative community effects from credit unions purchasing banks are misinformed and inaccurate, CUNA President/CEO Jim Nussle wrote to Federal Deposit Insurance Corporation Chair Jelena McWilliams Thursday. McWilliams testified before the House Financial Services Committee earlier this week and expressed worry over the impacts of credit unions purchasing banks.
“While still extraordinarily rare relative to the number of bank mergers, credit union-bank transactions take place because they are good business decisions for the parties involved, as well as the consumers, small businesses and communities involved. Consumers benefit by gaining access to strong, responsible community-focused financial services,” Nussle wrote. “Communities benefit because credit unions provide more than $4 billion in indirect consumer benefits, especially in underserved areas that often have no other affordable option for financial services. And, clearly, bank investors benefit, or why would the bank sell in the first place?”
He added that there have been more than 30 of these transactions since 2012, and more than 80% have been conducted by credit unions that have a specific focus on low-income families.
Nussle also responded to McWilliams’ concerns over credit unions and the Community Reinvestment Act (CRA).
“There is a reason credit unions were excluded when Congress enacted the law in 1977. Simply put: banks were redlining and credit unions weren’t. This law was enacted to encourage banks to meet the needs of consumers in their communities that had been intentionally ignored and to reduce discriminatory lending practices, or “redlining,” the ramifications of which still plague our country today,” Nussle wrote. “Since their inception over 100 years ago, credit unions have continually offered full and fair service to their members, including those at low- and moderate-income levels.”
CUNA previously worked with Sen. Elizabeth Warren (D-Mass.) to alleviate her concerns over credit unions not falling under the CRA, and the result was a revised CRA reform bill from Warren that did not place credit unions under its authority.