There’s a rumor moving through Washington that the FDIC is preparing a rule this fall to make it harder for community banks to sell to credit unions—complete with a new “exit fee” and heightened, bespoke scrutiny for these transactions. If that’s true, it’s a mistake that would harm the very people regulators are sworn to protect. Credit unions don’t need special favors. But we also shouldn’t be targeted with special penalties for stepping in when local banks need a responsible, community-first buyer.
Let’s be clear about what’s reportedly on the table. According to multiple sources, Acting FDIC Chairman Travis Hill has been weighing a plan to add new hurdles to credit union–bank deals and slap an extra fee on sellers when the buyer is a credit union. A similar idea floated last year was withdrawn; and even if a new proposal appears, it would still have to run the full rulemaking process and win a majority of the five-member FDIC Board—meaning there’s time to get the facts right. We should use it.
An “exit fee” dressed up as policy is, in practice, a tax aimed at a particular kind of community-serving partnership. That’s wrong on the merits and disastrous in effect. Credit unions are member-owned, not-for-profit cooperatives. We exist to expand inclusion, keep services local, and return value to the people who use us—not shareholders on Wall Street. Penalizing a community bank for choosing to sell to a credit union won’t save that bank. It just takes away a lifeline that preserves access, jobs, and local decision-making. Blocking a sale to a credit union doesn’t keep the lights on; it only darkens the branch for good.
These transactions are not raids. They’re voluntary, transparent, and heavily regulated. They happen because bank boards—after exploring their options—decide a credit union is the best steward for their customers, employees, and hometown. When a credit union becomes the buyer, what stays is the most important thing: a local institution that knows the community and is structured to put people first. That’s good for the families and small businesses that rely on that branch. It’s also good for competition, because credit unions push prices down and service up across the market.
The broader context matters. Here is the real story: credit unions are filling gaps—particularly in rural and low-to-moderate income areas—while larger banks pull back. Why would anyone want to add new barriers to one of the few mechanisms that can keep a community’s last branch open?
For defense credit unions, this isn’t abstract. We operate on and around U.S. military installations across the country and around the world. We serve junior enlisted service members, veterans, civilian defense workers, and their families—people who move frequently, deploy often, and live under financial pressures most Americans never experience. Allowing a community bank near a base to sell to a credit union can mean the difference between continued access to fair financial services and a banking desert. It also protects local jobs and keeps payroll and property tax dollars in the community. In many markets, the alternative to a sale isn’t a different buyer—it’s a closed branch.
What about taxes? Bank lobbyists like to imply that these mergers evade taxes and shortchange the Treasury. The facts say otherwise. Credit union–bank transactions generate significant tax revenue. In deal after deal, the selling bank’s tax obligations are paid as part of the transaction economics—hundreds of millions of dollars, by industry estimates. The notion that an “exit fee” is needed to make the public whole is a talking point in search of evidence. If the concern is tax fairness, policymakers should look at the very real, very large ways many banks minimize their own tax bills—then ask whether it’s equitable to single out community-preserving deals for punishment.
The Independent Community Bankers of America (ICBA) has lobbied for years to stop these transactions, and some state-level efforts have tried to follow their script. That’s unfortunate, because the customers of selling banks don’t benefit when options are taken off the table. As we told Congress earlier this year, preventing bank sales to credit unions doesn’t keep institutions open; it deprives communities of choice and accelerates the trend toward fewer branches and more financial deserts. These deals are small in number but big in impact—especially in the places that need access the most.
I understand the FDIC’s mission. Safety and soundness must come first. Every transaction—whether bank-to-bank or bank-to-credit union—deserves rigorous review. But the standard should be neutral and risk-based, not politically tilted. Creating a bespoke, punitive regime for one type of buyer isn’t prudent prudential policy; it’s industrial policy that picks winners and losers on behalf of special interests. If there are disclosure improvements that make sense for all acquirers, let’s talk. If there are supervisory concerns in a particular deal, regulators already have the tools to address them. What we don’t need is a surcharge on community-saving transactions simply because the buyer is organized as a cooperative.
There’s also a values question here. Credit unions were built to serve people of modest means. That’s not a slogan; it’s our structure. When credit unions acquire a community bank, they bring a “people over profits” model into a market that might otherwise lose local service altogether. Members benefit through better rates and lower fees; non-members often benefit too as competition forces others to sharpen their pencils. In a year when households are wrestling with uncertainty, we should be encouraging more locally anchored, consumer-first finance—not inventing penalties to make it rarer.
To the FDIC Board: if and when a proposal comes forward, I urge you to reject any approach that erects new, discriminatory barriers to credit union–bank transactions or imposes a special “exit fee.” Keep the focus where it belongs—on safety, soundness, and community impact—without bias against cooperative, member-owned acquirers. To lawmakers and community leaders: look past the talking points. The truth is that these deals are initiated by willing sellers, subject to robust oversight, and often the best (or only) way to preserve access to fair, affordable financial services in places that need them most.
If the FDIC moves ahead with a rule that penalizes communities for choosing credit unions, the Defense Credit Union Council will oppose it—relentlessly and publicly. We’ll do it because military families, veterans, rural towns, and working-class neighborhoods deserve better than regulatory gatekeeping that serves a lobby instead of the public. We’ll do it because in every corner of this country, when a bank decides it’s time to sell, a credit union buyer can be the difference between a dark storefront and a living, breathing institution that still knows your name.
That’s worth defending.
Always.
