Bank-Credit Union Mergers Ignored in Biden Executive Order

If President Biden’s Executive Order on competition is any indication, banker arguments that credit unions pose an unfair competitive threat may not be gaining traction in the White House.

In a wide-ranging Executive Order issued Friday, Biden urged federal regulators to revitalize efforts to ensure competition in myriad industries from aviation to agriculture. He urged banking regulators “to review current practices and adopt a plan, not later than 180 days after the date of this order, for the revitalization of merger oversight” under banking regulations.

But nowhere did Biden mention credit unions.

Biden said the review will be conducted by the attorney general “in consultation with the Chairman of the Board of Governors of the Federal Reserve System, the Chairperson of the Board of Directors of the Federal Deposit Insurance Corporation, and the Comptroller of the Currency.”

The National Credit Union Administration is not part of that group.

The purpose of the review is to “ensure Americans have choices among financial institutions and to guard against excessive market power.”

Bankers have been arguing that credit unions are purchasing community banks in growing numbers and have said such deals stifle competition in the industry. They add that the credit union tax exemption gives the institutions an unfair edge over banks.

American Bankers Association President/CEO Rob Nichols renewed those concerns after Biden released the Executive Order.“ As we review today’s Executive Order on competition, we will continue to call for updating merger review to finally consider nonbank competitors such as fintechs and credit unions that account for a growing share of the financial services marketplace, yet don’t have to meet bank requirements for compliance and community investment, and in some cases don’t even pay federal taxes,” Nichols said in a statement.

House Financial Services Committee ranking Republican Patrick McHenry of North Carolina panned the Executive Order. “This is nothing more than Democrats’ attempt to clean up their own mess caused by Dodd-Frank,” said McHenry. “The law’s maze of mandates and regulations drove consolidation within the banking sector.” He added, “This won’t help institutions—especially small and community banks—better serve their customers or create more competition in financial services.”

Biden’s Executive Order also addressed consumer protection issues. Biden encouraged the Consumer Financial Protection Bureau to adopt policies that will facilitate the portability of consumer financial transaction data so consumers can more easily change financial institutions.

The Executive Order also encourages the CFPB to enforce the prohibition on “Unfair, Deceptive, or Abusive Acts or Practices” to “ensure that actors engaged in unlawful activities do not distort the proper functioning of the competitive process or obtain an unfair advantage over competitors who follow the law.”

During the Trump Administration, the CFPB issued a policy stating that it would limit the use of UDAAP powers, but the Biden Administration rescinded that policy in March.


Executive Order on Promoting Competition in the American Economy

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