Letter to House Judiciary Committee Chairman F. James Sensenbrenner, Jr. and Subcommittee on Financial Institutions and Consumer Credit Chairman Spencer Bachus regarding regulatory relief
July 16, 2002
Honorable James Sensenbrenner
Honorable Spencer Bachus
U.S. House of Representatives
Washington, D.C. 20515
Dear Chairman Sensenbrenner and Representative Bachus:
On behalf of the Credit Union National Association (CUNA) and America's 82 million credit union members, I strongly endorse Rep. Spencer Bachus' efforts to amend H.R. 3951, the Financial Services Regulatory Relief Act of 2002, to provide credit unions with the same exemption for pre-merger notification requirements under the Hart-Scott-Rodino Act that is accorded to banks and thrifts.
As you know, although the law has been on the books for three decades, it has only recently become a factor for credit unions. For many years, most credit union mergers were too small to trigger the reporting requirements. As credit union assets grew over the last several years, however, some credit unions exceeded the pre-merger notification thresholds. In some cases, the fees associated with this reporting may have discouraged some credit unions from merging, and prevented their members from receiving better or even continued service from their credit union.
CUNA has made several efforts during the last few years to amend this law, but for a variety of reasons, has been stalled by the legislative process. Because of a desire to find an immediate solution to avoiding the substantial documentation and expense of the pre- merger notifications, earlier this year CUNA provided the Federal Trade Commission with extensive and compelling analysis to show that credit union mergers are extremely unlikely to raise any anti-trust concerns, given credit unions' relatively small market share and the availability of thousands of other financial providers. In fact, there is a remarkably little likelihood that any merger of two or more credit unions would cause more than a ripple in the pond. It is hard to identify a need for, or benefit from FTC or Department of Justice review of proposed mergers between credit unions. Yet without clear statutory guidance, these consumer-owned financial cooperatives could be thrust into a review process which Congress has found inappropriate for banks and thrifts.
CUNA's analysis prompted the FTC to confirm partial exemptions for credit unions. In a February letter to CUNA, the FTC agreed that certain types of credit union assets should not count against the reporting thresholds:
- cash and investments;
- mortgages and leases;
- other real estate owned; and,
- land and buildings.
The letter from the FTC had the effect of exempting most credit union mergers because it said most credit union assets don't count toward the thresholds. Still, it is conceivable that a credit union merger could exceed those thresholds. It would be helpful to get a legislative exemption. A legislative exemption would make it more clear, and put us on the same footing as banks and thrifts.
Please feel free to call me or Gary Kohn of my staff if we can be of any further assistance in this important matter.
Daniel A. Mica
President & CEO