It was hardly unexpected, but the Iowa Bankers Association joined by the American Bankers Association are objecting to a Federal Reserve application by the Iowa Credit Union League to form a bank holding company to buy an Arizona bank.
The comment period on the league's Sept. 18 application to purchase CrediCard National Bank of Tucson and convert it into a wholesale bank for CU corporate transactions was scheduled to end this week with staffers from the Federal Reserve Bank of Chicago expected to take action on the application this month.
"We are certainly not discouraged by the bankers' objection and we are not surprised either but it should be known that we are following all the rules though this is something that we have not tried before," said Pat Jury, president/CEO of the Iowa League in detailing the unusual CU plan to buy the Tucson bank to help ease the corporate crisis.
The league said it wants to buy the private label card bank for its member CUs fearing a demise of Iowa Central Corporate CU of Des Moines.
In its opposition to the application contained in Oct. 23 letters, both the ABA and IBA said CUs as tax exempts, would gain a competitive advantage over banks and "be a burden to taxpayers" by offering broad corporate processing and investment services through CrediCard. By owning a bank, the league and Iowa CUs would be engaging in an area "beyond the scope of their original purpose."