RANCHO CUCAMONGA, Calif. – Using words and phrases such as "redundant," "restrictive" and "would cause confusion among consumers," the California and Nevada Credit Union Leagues sent their comment letter to the Federal Trade Commission on the agency's proposed rules governing disclosures that privately insured credit unions must make to their members. In his letter, League President/CEO David Chatfield made it clear that, "The Leagues together support law and regulation that increase consumer awareness regarding the financial services they receive at their chosen institution." However, he stated that some of the proposed regulations will cause undesirable consequences, "ultimately hurting the consumers they are supposed to protect." The Leagues also urged the FTC to adopt guidelines developed by NCUA and the FDIC regarding the types of advertising that must contain private insurance disclosures. Under Section 320.5 of the FTC's proposed rule governing acknowledgments of disclosures, credit unions that converted to private share insurance after June 19, 1994 will be forced to refuse deposits from any new or existing depositor unless the depositor has signed a written acknowledgment indicating the institution is not federally insured. Chatfield wrote in his letter that the Leagues are "extremely concerned" with that provision. "This proposal is redundant, impossible to achieve, would unfairly require affected credit unions to cease long-standing relationships with faithful members who may unintentionally fail to respond, and would have a chilling effect on competition by unjustly discoursing any future conversions from federal to private insurance," Chatfield wrote. His letter also notes that NCUA requires extensive disclosures when a credit union plans to convert to private insurance; that the written acknowledgement rule contravenes amendments to the FDIC Improvement Act of 1991 that Congress integrated into the U.S. banking code in 1994; and the proposed FTC rules would force privately insured CUs that merged with federally insured CUs and retained private insurance, to refuse deposits from members who do not have a signed acknowledgement on record. The Leagues also criticized the proposed rule for potentially requiring credit unions that converted to private insurance on or before June 19, 1994, to provide records showing proof that they complied with disclosure requirements in 1994. Aside from taking issue with several of the proposed rules, Chatfield also made a suggestion concerning the final rule. He proposed the final rule require such disclosure only on printed or electronic materials, such as Web site or broadcast media, that mention share or deposit accounts or deposit account rates, and not on loan promotional materials that have no bearing on deposits. -

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