FOR IMMEDIATE RELEASE
ICBA Criticizes Proposed NCUA Credit Union Conversion Rules
Washington, D.C. (August 29, 2006)—The Independent Community Bankers of America (ICBA) criticized the National Credit Union Administration’s proposal to amend its rules regarding the conversion of insured credit unions to mutual savings banks, saying it is just another attempt to obstruct the right of a credit union to convert to a mutual institution. ICBA also said that the proposal under the Credit Union Membership Access Act (CUMAA) is inconsistent with rules issued by other financial regulators and exceeds NCUA’s statutory authority .
Under the proposal, converting credit union boards would have to give 30-day advance notice to members before the board could vote on a conversion proposal and would have to review all members’ comments and post them on the credit union’s website. The proposal also requires NCUA’s boxed disclosures be placed on a single piece of paper with no other text and with the reverse side blank.
“CUMAA requires that the NCUA’s rules be consistent with the charter conversion rules of other regulators,” said Chris Cole, ICBA regulatory counsel. “The 30-day advance notice requirement for board meetings is not only costly and burdensome, but it is also inconsistent with OCC and OTS conversion rules. CUMAA already requires the converting credit union to give three advance notices to members before the conversion vote. If this proposal is adopted, there will be a fourth notice requirement.”
ICBA also said that NCUA’s boxed disclosures are misleading and slanted and criticized its proposal to require converting credit unions to forward member communications to other members. The boxed disclosures, rather than offering an objective point of view regarding conversions, resemble warnings and concentrate on negative outcomes.
ICBA supports the right of a financial institution to choose the type of charter under which it operates. Further, ICBA endorses the Credit Union Charter Choice Act, which prohibits NCUA from using inappropriate means to prevent a credit union from converting to a bank or thrift charter.
Read ICBA’s comment letter on www.icba.org.