The Iowa Credit Union League (ICUL) is no longer in the market to buy a bank to handle its member credit unions’ credit-card transactions, its president and CEO, Pat Jury, said yesterday.

The league in September had applied to the Federal Reserve Bank of Chicago to purchase CrediCard National Bank of Tucson, Ariz., and convert it into a wholesale bank for corporate transactions. The league also needed the approval of the Office of the Comptroller of the Currency (OCC).

“Given the current regulatory climate, there would be some conditions imposed that would be inconsistent with our business plan,” Jury said. “They (OCC) really favor retail operations now; the point of what we were trying to do was find a wholesale alternative to the (Iowa Corporate Central Credit Union) payment systems. So we have given them notice we are withdrawing our application.”

ICUL, which represents 140 credit unions in the state, has been exploring alternatives to using Iowa Corporate Central Credit Union, which is one of 34 corporate credit unions that provide cash management and investment services to credit unions.

In September, a task force made up of federal regulators issued a report recommending a significant restructuring of that system, which was created in the mid-1970s to provide credit unions with economies of scale in cash management functions and better rates on their invested funds.

The task force was a response to the averted failure of U.S. Central Corporate Federal Union, the wholesale financial center for the network of corporate credit unions. In late January, the National Credit Union Administration (NCUA) board approved a $1 billion capital injection into U.S. Central, after it had posted a $1.1 billion loss in the fourth quarter of 2008 due to impaired real estate loans.

“If the Iowa Corporate changes and they aren’t there a year from now, how do we access payment systems?” Jury said. “So we looked down the road to owning a bank to have correspondent access.” One of ICUL’s chief concerns is that its smallest credit union members would be “lost in the shuffle” if Iowa Corporate merges with a larger corporate credit union, he said. “Right now we’re looking at everything; we’re looking at a variety of different options.”

Jury said he expects the league should reach a decision on a new course of action sometime in 2010.