Regulator wants to propose rule clarifying credit union responsibilities in bank purchases

Clarifying a credit union’s responsibilities when acquiring a bank would be the subject of a proposed rule by the federal regulator of credit unions, the NCUA, the chairman of the agency’s board said in an interview this week.

National Credit Union Administration (NCUA) Board Chairman Chairman Rodney Hood told The Wall Street Journal, in a story published Tuesday about credit union acquisitions of banks, that he plans to introduce the proposal “later this year” to make the clarification.

Hood said that credit unions should “make sure that they are acquiring a bank that comports with their existing field of membership and the lines of business they are operating in.” NCUA and federal banking regulators generally need to approve the acquisitions prior to their completion.

Some in the banking industry have bitterly complained about the increasing incidence of credit unions’ buying banks, typically through “purchase and assumption” arrangements. According to numbers compiled by S&P Global Market Intelligence, 12 bank acquisitions by credit unions have been announced this year; nine were announced the previous year. From 2013-17, there were 12 total.