The NCUA’s rules regarding director responsibilities won’t increase the likelihood of litigation and won’t create a conflict between the interests of the credit union and individual members, NCUA General Counsel Robert Fenner said in an opinion letter.
Fenner wrote that the regulations passed by the NCUA board do not create “any sort of litigation trap,’’ because they don’t create a private cause of action. Also he wrote that board members of FCUs are encouraged to consider the long term effect of their actions.
He noted that the rule clarifying that board members owe fiduciary duties to members is not a “difficult concept nor one that surprises or concerns directors.’’
Fenner was responding to a letter from nine western credit union associations.
Fenner also wrote that when board members make decisions that balance the competing needs of their members they won’t be violating fiduciary duties, even if some members are harmed by the action.
Fenner also disagreed with the suggestion made by the state associations that the prohibition against reimbursing board members for civil penalties resulting from federal or state regulators would limit the ability of FCUs to recruit board members.
He noted that it isn’t a blanket prohibition and that credit unions can take out liability insurance.
