Treasury Assistant Secretary Requests Information on Insurance Conversions, State Exam Fees

ARLINGTON, Va.-After meeting with NAFCU in January, Treasury Assistant Secretary for Financial Institutions Wayne Abernathy requested additional information from the trade organization. One of the key questions Abernathy asked involved the voting requirements for the conversion of a state chartered credit union to private insurance and the distribution of state chartered credit unions’ examination fees. In a letter, NAFCU explained that the majority of the board of directors and the majority of at least 20% of the membership must vote in favor of a conversion for it to pass. Additionally, NAFCU’s letter said that NASCUS advised NAFCU on the distribution of state chartered credit union examination fees, which vary from state to state, but generally either go directly into the state’s general fund, go directly to the parent department or agency, go to a State Treasury fund for use only by the agency and surplus continued, or go directly to the credit union or parent department with excess going into the state’s general fund. Even in states where the regulator is self-supporting, governors have been known to take money from the regulator to balance the state’s budget. NAFCU President and CEO Fred Becker also reiterated the trade group’s support of regulatory relief legislation, with the exception of the provision permitting privately insured credit unions to join the Federal Home Loan Bank System, which NAFCU said needs further study. Becker asked that Treasury also support other amendments, including the elimination of the member business lending cap, easing of the “reasonable proximity” requirement in select employee group adoption, removal of “local” from the definition of a community, allowing NCUA greater authority on federal credit union governance issues, and carving out a credit union exemption to the Securities and Exchange Commission’s broker/dealer registration. He also advocated funding Section 151 of the Federal Deposit Insurance Corporation Improvement Act of 1991, which requires privately insured institutions to make several disclosures to depositors and obtain written acknowledgement that their funds are not protected by the full faith and credit of the U.S. government.