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ARLINGTON, Va.-Despite accommodations made to concerns from the credit union industry, NASCUS continues to feel that NCUA’s final regulation on disclosures for conversions to private insurance violates states’ rights. In a statement following the Jan. 13 NCUA Board meeting, NASCUS noted its appreciation for NCUA’s willingness to listen to comments from the industry before issuing its final rule. “NASCUS is strongly supportive of the pro-consumer language contained in Rule 108b regarding information and disclosures,” the statement read. “Although we continue to believe the final rule is preemptive of state authority, we are pleased with the NCUA Board’s willingness to make some changes that acknowledge state authority,” NASCUS President and CEO Mary Martha Fortney said. “We support the rights of states to decide if private insurance is appropriate for their individual state and furthermore, have the ability to regulate disclosures and protect their state’s consumers.” In a statement, NASCUS noted some of the adjustments made, such as eliminating NCUA’s prior approval authority for the disclosure language; eliminating the requirement that private insurance disclosures be made on the front page of a credit union’s Web site without having to scroll; requiring converting credit unions to state they are aware of the disclosure requirements under the Federal Deposit Insurance Corporation Improvement Act rather than that they will be in compliance; and that ballot requirements for votes for and against are of equal size and type. Still NASCUS balked at the idea that state chartered credit unions would have to give up term deposits up to the federally insured limit of $100,000 without penalty. Though this is better in NASCUS’ eyes than the absence of a cap, as in the proposal, NASCUS stands firm that these decisions are up to state and contract law. NASCUS Executive Vice President for Government Relations Sandra Troutman said she could not provide specific examples of where the new rule preempts state authority because that varies from state to state. “State law basically dictates what state chartered credit unions are permitted,” she explained. “Obviously, this would include terminating federal insurance and authority to have private insurance as well.” State legislatures and regulators are in the best position to make these decisions, Troutman argued. In NCUA’s final rule, the agency is “substituting NCUA’s own judgment for that of the state legislature or regulator,” she stated. State law also determines contract law, Troutman said, with regard to the term account withdrawals. “In contract law, a state’s law dictates what activities can be entered into,” she said. Troutman added that she could not comment on credit union members’ expectation of federal insurance when the account is opened because the laws are different in each state. “As I mentioned, each state law is different, so every circumstance is unique. There is no blanket law about state contracts or state law that can apply in all circumstances. As you know, some state laws do not provide for private insurance,” she pointed out. [email protected]

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