DALLAS -- In what might be the strongest regulatory effort to date that addresses unsolicited merger attempts within the movement, Texas state-chartered credit unions could potentially have more protections than those in other states.
At the urging of the Texas Credit Union League, the Texas Credit Union Commission is proposing a rule that would address unsolicited mergers within the credit union industry. The rule would prohibit a credit union from offering a merger inducement to another credit union's members as a means of promoting a merger of the two credit unions. The commission has also approved publishing for comment the proposed amendment to 7 TAC 91.1003 concerning mergers and consolidations. The commission is scheduled to meet again Oct. 19. Credit unions are encouraged to send comment letters on the proposed rule.
Calling credit union "hostile" takeovers "a serious and imminent threat," the Texas Credit Union League's board has vowed to do all it can to support the targeted credit union. At its June meeting, the board unanimously adopted a resolution outlining its position on hostile takeover actions of their member credit unions. It states that any hostile takeover attempt is "a serious and imminent threat" warranting "strong countermeasures" on the league's part. Those actions included "vigorously defending" credit unions and their charters, and "strongly admonishing the actions by supporting credit unions to the fullest extent possible."
"The role of the Texas Credit Union League is to protect and advance the cooperative structure of the Texas credit union movement," said Dick Ensweiler, the league's president/CEO. "We believe that any hostile takeover attempt of a credit union poses a serious and imminent threat to our future."
The resolution also said the league will work closely with CUNA and the Texas Credit Union Department "to ward off unwelcome suitors."
"These hostile takeover actions do not promote the deep-rooted 'people helping people' philosophy that founded and nurtured these great institutions," Ensweiler said.
Several leagues have already adopted resolutions offering protections against unsolicited merger attempts. NAFCU recently said that it still has concerns with such merger attempts and continues to urge the establishment of "rules of the road". (see related item on page 12).CUNA has not responded to queries on if the trade group plans to do anything further on unsolicited merger attempts. NCUA said it stands behind its long-time stance that it will not consider a merger proposal if it is not approved by both credit union boards.
In early March $1.6 billion Wings Financial Federal Credit Union sent a merger proposal to $182 million Continental Federal Credit Union, which turned down the plan. Wings Financial continued to court Continental's membership with a campaign that lasted nearly a month and a half. NCUA essentially stopped the campaign in mid-April when it ruled that the $200 payments Wings Financial had promised to Continental's members were impermissible under the Federal Credit Union Act.
According to Harold Feeney, commissioner of the Texas Credit Union Department, the fervor surrounding what many have described as hostile takeovers similar to those seen in the banking industry is new territory.
"Over the last four months, unwelcomed mergers have been a hot topic in the industry," Feeney said. "Ultimately, the commission decided to propose a change. They're looking into it."
Calls to Gary Janacheck, chair of the Texas Credit Union Commission, were not returned by press time. The nine-member group has considerable pull. All members are appointed by the governor with the advice and consent of the state's Senate.