GOP Rep. Hill Wants to Examine Bank Purchases by Credit Unions
House committee vice chairman raises tax questions during hearing.
A key Republican congressman said Wednesday that he wants to take a closer look at deals in which credit unions purchase banks—a subject that generally has been ignored on Capitol Hill, much to the chagrin of banking trade groups.
House Financial Services Committee Vice Chairman Rep. French Hill, R-Ark., said he recently examined reports that credit unions purchased 16 banks during a recent year.
“I mean are these tax-paying companies that are converted to non-tax-paying companies,” he asked NCUA Chairman Todd Harper, during a Financial Services Committee hearing that featured all of the federal banking regulators.
Hill asked if customer deposits are turned into credit union share deposits when such deals are finalized.
He said Republicans and Democrats on the committee are interested in the issue and asked Harper to provide the committee with a report on such deals.
No other committee member raised the issue during the hearing.
The Independent Community Bankers of America has, for a long time, asked Congress to hold hearings on such deals, saying that credit unions leverage their tax exemption to propose a better deal than competing banks can offer. The group contends that when a credit union buys a bank, the institution is taken off the corporate income tax rolls.
Credit union trade groups have responded that the members of a merged financial institution benefit from the deal.
In recent years, members of Congress have steered clear of the credit union-bank feud.
Few Questions for Harper
Harper faced few questions during the hearing, with most of the queries from committee members focusing on issues such as capital requirements at large banks.
In his opening statement, committee Chairman Rep. Patrick McHenry, R-N.C. accused the regulators of abandoning their independence and said they were bowing to the political policies of the Biden Administration.
“I’ll finish with this, there appears to be a desire to remake the American financial system to better align with regulators’ political preferences, rather than to dutifully implement the laws enacted by Congress,” McHenry said. “These supposedly independent regulators are blindly following orders from the White House and political activists—leading to gross mismanagement of their agencies and the American economy.”
However, he did not cite any examples dealing with the NCUA or credit unions.
Interchange Issue Raised
On another issue, Rep. Blaine Luetkemeyer, R-Mo., used the hearing to urge fellow committee members to ensure that Congress does not pass the controversial credit card interchange legislation that is being pushed in the Senate.
“We’ve got to put an end to this,” he said.
Citing a Wall Street Journal story this week that provided details about sexual harassment problems at the FDIC, committee members asked the regulators to provide them with details about how their agencies deal with such problems.
Harper Wish List
In his opening statement, Harper repeated the legislative wish list that he provided to the Senate Banking Committee during a hearing Tuesday.
“While the credit union system continues to perform well overall, several amendments to the Federal Credit Union Act would provide the NCUA with greater flexibility to effectively regulate the credit union system and protect the Share Insurance Fund in light of an evolving economic environment, a changing marketplace, and technological advancements,” Harper said.
For instance, he asked the committee to consider granting the NCUA the power to examine third-party vendors that work for credit unions and to restore pandemic-related changes to the NCUA Central Liquidity Facility.