Mutual and Savings Institutions

Position

• Mutuality is a viable charter alternative that should be accorded parity in all respects with other charter forms. A financial institution has the right to choose the type of charter and business model under which it operates whether it is a mutual institution, a new Office of the Comptroller of the Currency (OCC) charter for mutual national banks, or a “covered savings association” as created under the Economic Growth, Regulatory Relief and Consumer Protection Act, enacted in 2018.
• Mutual institutions should be equally represented and accorded parity in all respects with other charter forms. Any proposed legislation or regulations should consider the impact on the mutual bank business model and its viability.
• No regulatory agency should obstruct the right of a financial institution, including a credit union, to convert to a mutual institution charter. Congress should provide a path for credit unions to convert to mutual savings institutions in a straightforward manner without regulatory or other barriers.
• ICBA supports the authorization of mutual banks to issue capital instruments that would qualify as common equity tier 1 capital.
• ICBA supports the right of a mutual or savings institution to assert a private right of action under the Savings and Loan Holding Company Act.
• ICBA supports the formation of new mutual savings institutions, particularly those that could be created in low-income and underserved communities and believes that state and federal regulatory agencies should take an active role their formation.
• Regulators must recognize and preserve depositor rights as embodied in Federal and state law, particularly with respect to purchase and assumption transactions by nonbanks including credit unions.

Background

Mutual institutions were established and are maintained for the benefit of their communities, depositors, and borrowers. They are well-run financial institutions that provide local service and investment to improve the quality of life in their local communities. ICBA strives to meet the needs of its mutual institution members and will support the choice of mutual ownership before all regulatory and legislative bodies.

Charter Choice. ICBA opposes any legislative or regulatory action to pressure mutual institutions to convert to stock form or to eliminate the option of mutuality and supports the right of mutual institutions to refuse funds offered for deposit by persons outside their communities.

New Capital Option. ICBA also supports the authorization of mutual banks to issue capital instruments that would qualify as common equity tier 1 capital. Private capital instruments would provide a new capital option that would help preserve the viability of mutual banks and allow them to continue to serve their communities.

Future of Mutuality. ICBA believes regulatory agencies should recognize the benefits of growing mutual banks and should provide resources to aid in their formation, particularly in areas that are underserved. The creation of mutual banks in low-income and underserved communities can be an effective way to bring banking services to areas of the country that do not currently have adequate banking services.

Prudential bank and credit union regulators should develop a path for credit unions to convert to mutual banks in a straightforward manner that allows for institutions to change charters without intimidation.