ALEXANDRIA, Va. - At its February regular meeting the NCUA Board approved, in a 3-0 vote, a final, consensus version of its draft, 2000-2005 strategic plan and voted unanimously to publish a proposed regulation implementing the consumer privacy requirements of the recently passed Financial Services Modernization Act (S. 900). In other action, the board-in a 2-1 vote with NCUA Board Chairman Norman D'Amours dissenting-approved a community charter conversion for 22,000-member Wesla FCU of Shreveport, La. to serve the 340,000-person population of Caddo and Bossier Parishes and unanimously approved a proposed rule curtailing agency asset recovery authority during conservatorships and liquidations. "I think this is just growth for the sake of growing," objected D'Amours to the Wesla conversion application after learning that the low-income FCU (a designation that could change after the conversion) had no dire need for the charter amendment and that 31 other CUs would be overlapped, "and (a process capable of) introducing unnecessary and unneeded competition into the movement...." The application, however, was supported by NCUA Board members Yolanda Wheat and Dennis Dollar, with Wheat specifically stating-after ascertaining that the FCU's application indicated efforts to customize products and services to low-income needs-that she didn't have a "problem with growth for growth sake," as growth often benefits low-income members. The board also unanimously approved First Carolina Corporate CU's (Greensboro, North Carolina) request to accept $34.5 million in paid-in capital (PIC)-an amount that exceeds the corporate's regulatory PIC ceiling of $25.6 million by $8.9 million-and passed, in a 3-0 vote, a final rule granting CUs in U.S. territories and possessions authority to act as IRA trustees or custodians. Separate insurance of these accounts was also approved. In recognition of delayed agreement on its strategic plan, the board also postponed consideration of its derivative annual plan; and in later, closed session it deferred scheduled disciplinary action against board Special Assistant Dorothy Foster and Region V Associate Regional Director Russell White, both of whom were implicated in the agency's 1996-1997 hiring scandal. In the privacy rule action, which must be finalized by May 12, the board approved draft formulations that require all federally insured credit unions (including small CUs) to develop privacy policies that: * list the categories of "non-public private information" that the CU collects and discloses; * list the categories of affiliates and non-affiliates with whom the CU discloses the information; * allows for an "opt-out" (or partial "opt-out") choice for customers (and "consumers") when the CU discloses customer non-public private information to non-affiliates that do not meet certain exceptions (such as a "joint marketing" agreement or private label credit card servicing); and that * must be communicated to "customers" (generally, but not always, members) at the time of the initial transaction and annually thereafter, and to "consumers" at the time of the initial transaction if the information is shared with any non-affiliated third party not covered by rule exceptions. The banking-like proposed rule accommodates the CU difference, NCUA staff said, by drawing privacy policy distinctions between "customers" (i.e., members or non-members who enter into a "continuing relationship" with a CU) and "consumers" (e.g., a non-member who uses a credit union's ATM or someone who applies for membership). The proposed rule also reflects the CU difference in that it treats CUSO's as CU affiliates (and therefore not subject to the "opt-out" provision) generally if the CU owns 25% or more of the CUSO and possibly (depending on comment) if the CUSO is wholly owned by credit unions alone-and requires NCUA to consult with state authorities on the CUSO/affiliate determination with respect to state-chartered CUs. Comment on the proposed rule must be filed with NCUA by March 31. In the strategic plan action, the board-after a previous postponement of a vote in the matter-agreed that the right balance had finally been struck between plan ends and means in support of its ambitious five-year regulatory prospectus that includes provision for: * promoting CU safety and soundness in volatile economic times; * integrating emerging technologies into CU operations; * promoting a regulatory environment that facilitates CU innovation; * leveraging the CU advantage in enhancing service to the underserved; and * making NCUA more of a "proactive partner" with the CU community in addressing 21st Century challenges. The final plan, which emphasizes NCUA's role as a safety and soundness regulator, finally received Dollar's endorsement as "a much improved plan" after numerous changes were made in the plan's implementing text. He asked that critics do a comparative study of the draft and final versions before jumping to conclusions about the final product-but listened to staff testimony characterizing the plan's staffing requirements, though primarily to be satisfied internally, would not be "revenue neutral." Dollar did, however, try to eliminate a plan provision supporting NCUA's bid to enact permanent supervisory authority over third-party CU vendors-obtained by the agency as a Y2K emergency and due to expire at the end of 2001-but his amendment to this effect was defeated in a 2-1 vote. In his defense of his amendment, however, Dollar said that the oversight authority as currently constructed is an "overextension" of NCUA's regulatory role in that it applies not only to information technology vendors but to all CU third-party vendors. D'Amours disagreed, however, noting that all other federal financial industry regulators had similar authority. The plan also provides for an NCUA "strategic management council" to, according to Wheat, review the "options and methods we use to implement the plan." In its asset recovery action the board approved for a 30-day comment a proposed rule that would prevent NCUA, when acting as conservator or liquidator, from repudiating contracts transferring property from a federally insured CU (FICU) to another party during a securitization or participation. The measure, it was believed, would reassure outside parties in the securitization and participation marketplace of their claim on assets pledged in the transaction and thereby help FICUs' competitive posture while keeping NCUA "in line" with its fellow regulators. The board reportedly delayed action in the Foster/White case-whom the Office of Special Counsel in October had linked as masterminds to the agency's 1996-1997 hiring scandal and recommended the punishment of dismissal-because of board disagreement over an appropriate sanction. -
gmcorrigan@mindspring.com
