A bank group in Colorado is asking state regulators to reexamine certain state laws regarding a recent bank purchase by a credit union.
Last fall, Boulder-based Elevations Credit Union
Bank groups have spoken out often in the last year regarding credit union purchases, but this is believed to be the first time a state banking trade group has publicly asked regulators to reconsider a sale's legality.
The Colorado Banking Board is expected to consider the deal on Jan. 16.
“We regard this proposed purchase as an effort to expand the credit union’s activities beyond what was contemplated in law and by a process to avoid the clear limitations and intent of Colorado statutes. But we are clear: we object to any purchaser not authorized by statute, any buyer that is a nonbank,” Don Childears, CEO of the Colorado Bankers Association, wrote in a letter Monday. Since the deal was announced, he added, the trade group has heard from banks of a variety of sizes in and out of the Greeley market who oppose the transaction.
“We have no quarrel with Cache Bank & Trust, but we object on principle to any unauthorized purchaser, in essence any nonbank, in such a transaction,” he said. “This includes a tax-advantaged credit union, buying a tax-paying bank. We believe in a free market, but one in which all competing businesses play by the same rules. That isn’t the case here.”
Childears’ letter then goes on to outline a number of objections, including that the purchase violates a state statute which permits sales of assets between state-chartered banks. “The statute doesn’t reference any other purchaser of such assets, which we believe clarifies that a bank may only sell the bulk of its assets to another bank,” he wrote.
The letter claims that due to the wording in several Colorado statutes, CUs are not authorized to purchase banks. Rather than letting regulators determine how these deals move forward, CBA said, the onus is on Colorado lawmakers to either clarify existing statutes or change them.
“You are being asked to approve a sale to an ineligible buyer,” Childears wrote. “We oppose allowing an ineligible purchaser – a nonbank, a credit union or otherwise – under state law to acquire a bank.”
Elevations representatives said the credit union was unable to comment on pending regulatory action.
This story was updated at 9:37 P.M. on Jan. 14, 2020.
