The National Credit Union Administration’s (NCUA) proposal to modernize the rules governing mergers of federally insured credit unions was met with mixed reviews from banks and credit unions.
The proposed amendments to 12 CFR Part 708a, Subpart C were published in the Federal Register on April 22, 2026, as part of the agency’s broader Deregulation Project. The public comment period closed on June 22, 2026.
The proposal would simplify the process for credit unions that choose to merge into a bank by removing several procedural requirements adopted in 2010. The changes include eliminating certain formatting requirements for member disclosures, replacing mandatory newspaper notices with more flexible digital communications, streamlining due diligence reporting and removing nonbinding voting guidelines.
The NCUA said the proposal is intended to reduce administrative costs, modernize the merger process, and give credit union boards greater flexibility while maintaining core safeguards requiring members to receive notice, disclosures and the opportunity to vote on a proposed merger.
For credit unions, the rule would make the merger process less cumbersome by reducing paperwork and allowing boards to communicate with members using modern methods rather than prescriptive regulatory formats. Community banks could also benefit because the streamlined procedures may make it easier for credit unions that determine a bank charter better serves their members to complete a merger with a bank, according to the NCUA.
America’s Credit Unions (ACU) raised objections to several aspects of the proposal in a comment letter submitted to the agency.
“America’s Credit Unions supports the credit union charter and cooperative model. We do not advocate for policies that would encourage or create incentives for credit unions to convert to bank charters,” the ACU wrote. “However, we recognize that some of the parameters outlined in the proposal are simply not conducive to the methods of member communication today. Thus, America’s Credit Unions supports the Board’s proposals that would not meaningfully alter the content and quality of the information required by credit unions to inform their members of a bank conversion.”
The organization requested the agency consider the following revisions:
- “Eliminating overly rigid formatting requirements such as ‘clear and conspicuous’ that require specific font sizes and bolding requirements as they are outdated and may be less effective for digital communications;
- “Removing the newspaper publication requirement as this no longer reflects how most members receive information. In today’s market, posting notices through online formats is most conducive to how members interact with their credit unions;
- “Maintaining the requirement that key disclosures appear in a distinct, standardized format because prominent disclosures help to ensure members understand the consequences of a bank merger, including impacts on ownership interests;
- “Keeping the plain language requirement as it is necessary that member communications remain clear, understandable, and consistent across credit unions; and
- “Retaining non-regulatory voting guidance because it provides useful procedural directions, promotes consistency, and reduces uncertainty for credit union boards and members.”
The issue of mergers between banks and credit unions has been a point of contention for years, as banking advocacy groups have repeatedly asserted credit unions have an unfair advantage due to their tax-exempt status, among other complaints.
However, the Independent Community Bankers of America (ICBA) largely favored the proposed changes, saying they would eliminate unnecessary regulatory burdens while preserving key protections for credit union members.
“By modernizing member communications, eliminating overly prescriptive formatting requirements, and removing non-binding guidance, the proposal empowers credit union boards to exercise sound business judgment in the best interests of their members,” the trade group wrote. “From a community bank perspective, the practical effect is that credit union-to-bank mergers could become somewhat easier and less burdensome to complete, as credit unions would face fewer procedural hurdles and disclosure requirements when pursuing a conversion through a merger with a bank.”