NY Bankers Seek Regulatory ‘Pause’ in Credit Union-Bank Merger
Banking trade groups contend deal deserves close scrutiny
New York banking trade groups are asking the New York Department of Financial Services to “pause” the first-ever merger between a credit union and bank in the Empire State, in order to conduct an extensive investigation of the proposed deal.
In a letter last week, the presidents/CEOs of the New York Bankers Association and the Independent Bankers of New York State asked Adrienne Harris, superintendent of the New York Department of Financial Services, to delay the merger of Catskill Hudson Bank and the Hudson Valley Credit Union. Under the merger, announced in January, customers of the bank would become members of the credit union.
“We believe this acquisition warrants careful and transparent consideration and scrutiny due to the recent significant shifts within the credit union industry, particularly their unchecked expansion and continued exemption from most taxes and the Community Reinvestment Act,” Claire Cusack, head of the New York Bankers’ Association and John Witkowski, chief of the Independent Bankers of New York, wrote in their letter.
The two presidents/CEOs said they “strongly object” to the acquisition of a taxpaying bank by a largely non-tax-paying credit union. They said since the credit union is not subject to the CRA, they believe that the merged institution will be able to reduce their assistance to low- and moderate-income communities.
They wrote that while credit unions were established with a mission to provide basic consumer financial services to a tight field of membership, that no longer is the case. “In defiance of their original mission and flush with cash due to their advantageous tax status, these large financial institutions choose to expand rather than lower the prices of loans, create more affordable housing or increase services to current members,” they charged.
In addition to the merger with Hudson Valley Bank, the credit union is acquiring eight branches of other banks, according to the two trade group officials. “Simply put, a credit union’s acquisition of a bank defies its original mission and structure to serve small groups of people of modest means,” they concluded.
In announcing the merger in January, credit union president/CEO Jonathan Roberts said the bank’s leadership faces huge challenges. “In today’s increasingly competitive, heavily regulated environment, smaller community banks like Catskill Hudson face many obstacles to growth,” he said. He added, “For Catskill Hudson customers, we can offer a much wider array of financial services, while providing job security for its employees.”
Roberts said he expected the merger to be finalized during the second half of 2024.