In a statement last week, the league said it was withdrawing its September application to the Federal Reserve Bank of Chicago on grounds that it was running into regulatory opposition on the wholesale status, preferring the bank operate as a retail business.
League officials explained that given current economic conditions, bank regulators had suggested a retail operation but that idea did not fit the league plan to add new functions to the charter of the $16 million CrediCard National Bank of Tucson under a league-run bank holding company.
Iowa credit unions had hoped the wholesale idea would help protect its smallest CUs from undue cost burdens if Iowa Central Corporate CU of Des Moines, one of the smallest corporates, gets merged under the NCUA's corporate restructuring.
League officials specifically blamed the withdrawal on issues raised by the Comptroller of the Currency, the agency that supervises national banks. The concerns regarding the league's business model for the bank were brought to the attention of lawyers while the application was being formally processed by the Chicago Fed.
Murray Williams, chief operating officer of the league, said that since the application filing, league attorneys and the Comptroller staff "had been going back and forth" over the language, but it was decided last week to abandon the bank idea and pursue other alternatives. Those other alternatives were not spelled out.