Upsides of bank sales to credit unions

In December, I testified before the House Financial Services Committee in my capacity as a financial industry regulator.

During questioning, several committee members noted the trend, recently reported in the media, of credit unions “acquiring” banks. I was glad to take those questions, as I welcomed the opportunity to clarify this issue.

It is important to clear up the most common misperception of these transactions. When speaking of credit unions “acquiring” banks, these credit unions are actually purchasing bank assets and certain liabilities in market-based transactions. These purchases could include loans and deposits, but credit unions could not own bank stock, for example.

Some argue that these transactions threaten the original mission of credit unions, and because of this, credit unions no longer warrant their tax exemption. However, while credit unions are exempt from federal income taxes, they may still be subject to payroll taxes, property taxes and sales taxes.

 

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