The NCUA should spell out its procedures for finding potential assisted merger partners in a proposed rule and also be more forthcoming about the agency's role in ensuring a merger's success.
Those are among the recommendations of a task force of credit union and credit union league executives formed by CUNA to address the issue. It was chaired by Ohio Credit Union League President Paul Mercer.
The panel said changes in the system are needed because "concerns about how such mergers are handled by the agency abound within the system. More specifically, credit union concerns have focused on how the agency determines, which credit unions should be merged, which credit unions can be chosen to acquire a target credit union and what are the qualifications for credit unions selected as acquirers."
The NCUA has established a working group to discuss the issue and plans to issue a letter to credit unions "within a couple of months" spelling out its procedures for finding assisted merger partners and following through on the mergers, agency spokeswoman Cherie Umbel said.
CUNA's task force said the NCUA's process for picking merger partners "is a mystery to most of the credit union system." The panel said it hopes the agency spells out how credit unions can apply to be acquiring credit unions and describes the methodology used for making selections.
The panel asks the agency to spell out its due diligence process for all potential partners. It also recommends that the agency establish an online registry of merger partners and also establish a website similar to FDICconnect, which is a secure, controlled access site that lets banks get information about acquiring problem banks and then register if they want to be considered as partners.
"The process has considerable impact on the health of the NCUSIF, which is of great concern to credit unions, but the credit unions don't know much about it. We hope this report changes that situation," said CUNA Deputy General Counsel Mary Mitchell Dunn.
In March, NAFCU expressed similar concerns about the current procedures in this area in letters to the NCUA from NAFCU President/CEO Fred Becker.