After the hearing on H.R. 3206 in May, all of us watching mutual charter conversions waited to see how NCUA would react. Based on the proposed regulations, it is apparent NCUA didn't get the message. It continues to thumb its nose at Congress and the courts.

H.R. 1151 authorized NCUA to promulgate rules for conversion voting that were to be “no more or less restrictive than those rules that apply to charter conversions by other financial institutions.” Congress wanted ministerial rules, at most.

However, with this third re-write in as many years, adherence to that mandate–if it ever existed–is now a distant memory. NCUA's egregious over-reaching is setting up the industry for more of the same public relations calamities and governance fiascos reported recently in the Credit Union Times, even ones triggered by circumstances unrelated to conversions.

At Columbia, for example, it has regrettably meant multiple lawsuits, the postponement of the annual meeting, and inevitable distractions from strategy. Save CCU's activists are now battling former Save CCU-endorsed directors. Much to the chagrin of their collectivist-minded comrades, the targeted directors have apparently abandoned their socio-political activism in favor of the broader interests of Columbia's membership. What all this internecine fighting has to do with providing high-quality service and competitive products–which is all that nearly every credit union member cares about–completely baffles us. Meanwhile, Save CCU's NCUA-triggered lawsuit caused a Washington state court to rule credit union members are no different than members of a mutual. The precedent-setting ruling contradicts the jingoistic anti-conversion message the boys at the American Association of Credit Union Leagues and the National Coalition for Member Trust are so fervently trying to spread. In fact, contrary to their claim, the court decision means directors cannot be sued for recommending a conversion. Over in Michigan, DFCU Financial prevailed in a lawsuit funded by the anti-conversion group led by Jim Blaine and Bucky Sebastian. Their local agents were demanding a meeting to remove DFCU Financial directors in sweeping retribution for allowing members to vote on a conversion. In reaction to DFCU's victory, David Adams, CEO of the Michigan league and ringleader of the local anti-conversion forces, indignantly insisted that NCUA require the wasteful meeting–one that would only serve to magnify a glaring credit union governance defect, imperiling the collective interests of all members and the safety and soundness of the institution.

The future of these star-crossed credit unions, and others, is being threatened by a gaggle of screeching left-of-center activists, self-serving former employees, and self-interested league and “movement” people. NCUA proposes to empower these unregulated radicals to insert themselves into the communications mix between directors and members. Should more credit unions continue to fall prey to socio-political activism, the whole credit union industry will become a laughing stock in the eyes of consumers, rather than the bona fide option for banking services the industry wants so much to be. Lee Bettis Executive Director Coalition for Credit Union Charter Options Washington