The NCUA told Credit Union Times on Thursday that it has scrapped a proposal that would require credit unions to report the original appointment or election date of directors, a move that could have created bad publicity for those with long-tenured board members.
The proposal was part of a broader package of potential 5300 Call Report changes sent to the U.S. Office of Management and Budget, said NCUA Public Affairs Specialist John Fairbanks.
However, Fairbanks said that during the public comment period the NCUA realized the industry had concerns about the necessity of the proposed change.
“We responded by weighing the benefits in light of those concerns. After reviewing the comments, we subsequently determined not to require directors to enter their date of election,” Fairbanks told Credit Union Times.
CUNA Deputy General Counsel Mary Dunn welcomed the news, saying that the rule didn’t seem nefarious at face value, but the lack of explanation by the NCUA regarding how it would assess the longevity of board members was troubling.
“Without explanation of how it would be used, it’s easy to see why credit unions would be concerned,” Dunn said. “We think NCUA was well advised to pull it.”
Olympia, Wash.-based consultant Marvin Umholtz, who works with a number of credit union boards and often writes about the topic, said the proposed requirement raised a number of relevant questions regarding the NCUA’s potential use of the data, the banking lobby’s likely use of the information, and how that information could “undermine the credit union democracy mythology.”
“Each of these relevant questions would merit significant separate discussion,” Umholtz said. “At its root the primary line of questioning is why did the NCUA want this information on the 5300 Call Report in the first place, did the reporting burden for credit unions exceed any tangible benefits, and was the NCUA’s subsequent decision to back off the information-gathering activity responsible?”
Umholtz added it would be ludicrous to contend that federal government tracking of a credit union board director’s tenure has any relevance to credit union safety and soundness, the NCUA’s primary objective.
“It should surprise no one that after reflection, and following a healthy dose of public criticism, the NCUA determined that requiring credit unions to report that information was not such a good idea after all. The agency should be commended for reconsidering and ultimately demonstrating good judgment,” he said.