Bank & Credit Union Acquisitions: Are They Transparent Enough?

The American Bankers Association (ABA) has issued a strong call for increased transparency within the credit union system, focusing specifically on the growing trend of credit union acquisitions of banks. Here are the key concerns:

• Lack of Member Approval: The ABA advocates for mandatory member approval before a credit union can acquire a bank. This ensures that member interests are prioritized.
• Hidden Financial Details: The ABA points to the frequent lack of transparency regarding the financial terms of these acquisitions. Full disclosure is vital for accountability.
• Impact on Communities: The ABA highlights the potential negative impact on communities and taxpayers when banks are acquired by credit unions, echoing similar concerns from the FDIC.
• Alignment of Interests: The ABA emphasizes the need to align the incentives of credit union management with those of the members, ensuring that decisions benefit the credit union membership as a whole.

These concerns stem from both a 2008 NCUA report and the recent surge in credit union acquisitions of banks, many of which lack transparency around their details. The ABA’s ultimate goal is to ensure greater accountability within the credit union sector.

Read the full letter here.