Regulatory overreach, an unnecessary limit on credit unions'choices and possibly illegal.

Those are among the critiques of the NCUA's proposed rule oncorporate credit unions contained in comment letters filed with theagency as of Jan. 26, two days before the deadline.

CUNA has “serious concerns” with several key parts, including alimit on the number of corporates a credit union can belong to andencouraging a fee to entities not federally insured, according tothe comment letter written by Mary Mitchell Dunn, the association'ssenior vice president and deputy general counsel.

She wrote that “only when an agency is directed by statute orimminent, overarching safety and soundness concerns should itimpose regulatory limitations on activities that should otherwisebe determined by the marketplace.”

Mid-Atlantic Corporate Federal Credit Union President/CEO JayMurray wrote that limiting credit unions to one corporate wouldeliminate the opportunity for credit unions to utilize apotentially better product from a second corporate credit union andforce them to look for services outside the industry.

NASCUS Senior Vice President and General Counsel Brian Knightwrote that “state law has long controlled state-chartered creditunion investments.” He added that the proposal would “encourageconcentration of the natural person credit union's exposure to thecorporate [credit union]. It would also limit the ability of manynatural person credit unions to make business decisions to addresschanging needs.”

Though NAFCU hadn't filed its comment letter as of press time,Carrie Hunt, the association's senior counsel and director ofregulatory affairs, said it too opposed limiting credit unions toone corporate membership.

“Credit unions should have an option to be in more than one ifit fits in to their business plan,” she said.

Another source of concern was the provision that would encouragecorporate credit unions to levy a fee to members that are notfederally insured in order to pay for the rescue of the corporatecredit union system.

Pennsylvania Credit Union Association President/CEO JamesMcCormack wrote that privately insured credit unions and othersshould assist in stabilization efforts, but the NCUA's approach is“grossly inappropriate.”

Corporate America Credit Union President/CEO Thomas Bonds wrotethat the proposal is “too far-reaching and does little to resolvethe issue of the NCUSIF insuring the shares of non-creditunions.”

American Bankers Association Vice President and Senior EconomistKeith Leggett threw cold water on the idea that such payments bynon-federally insured entities would be voluntary.

“To call such a premium payment 'voluntary' is a sham. In fact,the NCUA is sending an invoice to non-FICUs and establishing aprocedure to extort payments using penalties for noncompliance,” hewrote. “Non-FICUs are being conscripted into making thispayment.”

CUNA's Dunn wrote that “merely labeling the assessments as'voluntary' will not avoid the legal conflict, since the'contributions' would be treated by NCUA and considered by thosepaying them as assessments, since the proposal would imposesanctions, e.g., the loss of corporate credit [union] membership,if desired payments from a non-FICU member are not made in a timelymanner.”

Several comment letter writers expressed concR

egulatory overreach, an unnecessary limit on credit unions'choices and possibly illegal.

Those are among the critiques of the NCUA's proposed rule oncorporate credit unions contained in comment letters filed with theagency as of Jan. 26, two days before the deadline.

CUNA has “serious concerns” with several key parts, including alimit on the number of corporates a credit union can belong to andencouraging a fee to entities not federally insured, according tothe comment letter written by Mary Mitchell Dunn, the association'ssenior vice president and deputy general counsel.

She wrote that “only when an agency is directed by statute orimminent, overarching safety and soundness concerns should itimpose regulatory limitations on activities that should otherwisebe determined by the marketplace.”

Mid-Atlantic Corporate Federal Credit Union President/CEO JayMurray wrote that limiting credit unions to one corporate wouldeliminate the opportunity for credit unions to utilize apotentially better product from a second corporate credit union andforce them to look for services outside the industry.

NASCUS Senior Vice President and General Counsel Brian Knightwrote that “state law has long controlled state-chartered creditunion investments.” He added that the proposal would “encourageconcentration of the natural person credit union's exposure to thecorporate [credit union]. It would also limit the ability of manynatural person credit unions to make business decisions to addresschanging needs.”

Though NAFCU hadn't filed its comment letter as of press time,Carrie Hunt, the association's senior counsel and director ofregulatory affairs, said it too opposed limiting credit unions toone corporate membership.

“Credit unions should have an option to be in more than one ifit fits in to their business plan,” she said.

Another source of concern was the provision that would encouragecorporate credit unions to levy a fee to members that are notfederally insured in order to pay for the rescue of the corporatecredit union system.

Pennsylvania Credit Union Association President/CEO JamesMcCormack wrote that privately insured credit unions and othersshould assist in stabilization efforts, but the NCUA's approach is“grossly inappropriate.”

Corporate America Credit Union President/CEO Thomas Bonds wrotethat the proposal is “too far-reaching and does little to resolvethe issue of the NCUSIF insuring the shares of non-creditunions.”

American Bankers Association Vice President and Senior EconomistKeith Leggett threw cold water on the idea that such payments bynon-federally insured entities would be voluntary.

“To call such a premium payment 'voluntary' is a sham. In fact,the NCUA is sending an invoice to non-FICUs and establishing aprocedure to extort payments using penalties for noncompliance,” hewrote. “Non-FICUs are being conscripted into making thispayment.”

CUNA's Dunn wrote that “merely labeling the assessments as'voluntary' will not avoid the legal conflict, since the'contributions' would be treated by NCUA and considered by thosepaying them as assessments, since the proposal would imposesanctions, e.g., the loss of corporate credit [union] membership,if desired payments from a non-FICU member are not made in a timelymanner.”

Several comment letter writers expressed concern about therequirement for corporate credit unions to set up enterpriserisk-management committees.

Mid-Atlantic Corporate FCU's Murray wrote that under the lastcorporate rule issued by the NCUA, corporate credit union boardsalready have significant enterprise risk-managementresponsibilities and creating another committee would be anunneeded additional expense.

CUNA wrote that the rule, which requires the new committee toinclude one member who has no personal or professionalrelationships with the corporate credit union, doesn't distinguishbetween the roles of that committee and the supervisorycommittee.

NAFCU's Hunt said her association generally agrees with theproposal but wants clarification about whether the credit union canoutsource the expert on risk management.

NASCUS' Knight wrote that the proposed requirement for corporatecredit unions and CUSOs to issue combined corporate compensationdisclosures could “serve as evidence to pierce the corporate veiland inadvertently expose the corporate to the liabilities of itsCUSO.”

Ohio Credit Union League President/CEO Paul Mercer and GeneralCounsel John Kozlowski wrote that “access to a corporate CUSO'srecords by NCUA is an attempt to expand its authority overcorporate CUSOs even though NCUA has stated that CUSOs are notregulated by the NCUA.”

The NCUA's proposal to require corporate credit unions to have amore detailed disclosure of their boards' voting, including a listof how each board member voted, was criticized in the commentletters.

NAFCU's Hunt said this was an example of NCUA overreaching, andit would have the effect of focusing on the votes of individualboard members, rather than the board as a single unit. ern aboutthe requirement for corporate credit unions to set up enterpriserisk-management committees.

Mid-Atlantic Corporate FCU's Murray wrote that under the lastcorporate rule issued by the NCUA, corporate credit union boardsalready have significant enterprise risk-managementresponsibilities and creating another committee would be anunneeded additional expense.

CUNA wrote that the rule, which requires the new committee toinclude one member who has no personal or professionalrelationships with the corporate credit union, doesn't distinguishbetween the roles of that committee and the supervisorycommittee.

NAFCU's Hunt said her association generally agrees with theproposal but wants clarification about whether the credit union canoutsource the expert on risk management.

NASCUS' Knight wrote that the proposed requirement for corporatecredit unions and CUSOs to issue combined corporate compensationdisclosures could “serve as evidence to pierce the corporate veiland inadvertently expose the corporate to the liabilities of itsCUSO.”

Ohio Credit Union League President/CEO Paul Mercer and GeneralCounsel John Kozlowski wrote that “access to a corporate CUSO'srecords by NCUA is an attempt to expand its authority overcorporate CUSOs even though NCUA has stated that CUSOs are notregulated by the NCUA.”

The NCUA's proposal to require corporate credit unions to have amore detailed disclosure of their boards' voting, including a listof how each board member voted, was criticized in the commentletters.

NAFCU's Hunt said this was an example of NCUA overreaching, andit would have the effect of focusing on the votes of individualboard members, rather than the board as a single unit.