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Current Important Topics

States Slam on the Brakes for Credit Union Acquisitions of Community Banks

Over the last few months, the list of growing mergers announced between tax-exempt credit unions and taxpaying banks have been announced. In the recent months, some states are staring to sour on the idea.

Earlier this year, the Minnesota Department of Commerce blocked the acquisition of state-chartered Lake Area Bank by the Royal Credit Union. The Department of Commerce officially clarified that state law does not permit the acquisitions of state-chartered banks by credit unions. Meanwhile, the Mississippi State Legislature succeeded in passing a law stipulating that only FDIC-insured banks can acquire or merge with Mississippi-chartered state banks. The law, which went into effect in July puts a halt to any deals in progress. Similar actions have taken place in Colorado, Iowa , Tennessee, and Nebraska.

These are all encouraging developments. The fact that states are beginning to take action is due in no small part to banker advocacy.

It continues to be important that bankers need to speak up whenever it is seen that the credit union industry is pushing the boundaries of the statutory limits imposed on it by Congress.

Reference: Utah Banker: Issue 2: 2022: No Deal: States Slam On Brakes for CU Acquisitions of Community Banks

Questions and Answers


Must error notices received from customers be considered complaints?


The agencies have a risk focused consumer compliance examination approach, based on the potential for compliance errors to have an adverse impact on banking customers.

Prudence says it should be considered, reviewed and investigated in the same manner a complaint would be based on the potential for potential harm to the consumer.

While not every error and/or complaint is related directly to UDAAP, considering errors in this manner helps to ensure that the bank is working UDAAP into its procedures.

Reference: FDIC Compliance Examination Manual, II Compliance Examination – Evaluating Impact of Consumer Harm, March 2017.

Emerging Issues

Qualified Education Expenses / H.R. 8128

06/16/22 – Introduced in the House by Lloyd Smucker

Key Provisions:

  • Would expand the uses of qualified tuition program (529 plans) funds to include payment of costs related to industry recognized apprenticeship programs.
  • Would provide for payment of expenses related to a career and technical education program or a career pathway.
  • Would increase from 1.4% to 1.6% the rate of the excise tax on the investment income of certain private colleges and universities