May 17, 2021

Berger defends CU-bank mergers, blasts bankers' misleading claims


NAFCU President and CEO Dan Berger, on Friday, rebuked the American Bankers Association’s latest attempt to mislead congressional leaders and regulators on bank-credit union mergers in a letter to lawmakers

"The ABA continues to misrepresent the facts on these types of transactions. First and foremost, it is important to recognize that bank-credit union mergers are voluntary, market-based transactions that require a community banks' board of directors to vote on selling to a credit union," wrote Berger in response to the ABA.  "These are not ‘hostile’ takeovers."

"The bank is the one that ultimately makes the decision to sell to, and merge with, a credit union," added Berger. "Perhaps, ABA’s concerns would be better addressed by sending a letter to their members asking why they are choosing credit unions over banks."

Berger continued to note that these mergers are "a win-win" for communities that are in danger of losing essential financial services in the event a mega-bank were to buy a community bank. Additionally, NAFCU estimates that over $100 million in taxes have been paid in the past several years due to these transactions. This is in addition to the local and state income taxes, sales tax and payroll taxes credit unions pay. 

Berger also took ABA to task on its call for credit unions to be subject to the Community Reinvestment Act (CRA), reminding Congress that it was illegal and discriminatory practices that got banks subject to CRA. 

"Additionally, it is ironic that the ABA calls for credit unions to be subject to the Community
Reinvestment Act (CRA) at the same time they are seeking to lessen the CRA impact on banks. They want you to forget that CRA was adopted as a punitive measure to punish specific bad actors– namely banks and thrifts – for engaging in discriminatory practices such as redlining and disinvestment," stated Berger. "Credit unions were not included under CRA because there has never been any evidence that credit unions have engaged in these illegal and abhorrent activities."

Berger also noted the difficulty in being a community-based financial institution today due to over-regulation, competition from big banks, and unregulated actors entering the financial services space. NAFCU’s award winning advocacy team has been pushing for regulatory relief for credit unions and greater oversight of unregulated fintechs.

"A top priority of NAFCU is to ensure that there is an environment where credit unions can grow, thrive, and continue to serve," concluded Berger in support of bank-credit union mergers.

Ahead of congressional oversight hearings of the prudential regulatory agencies scheduled for this week, NAFCU will continue to highlight the credit union difference before lawmakers and support credit unions against the American Bankers Association’s specious attacks. 

Read Berger’s letter to Congress here.