WASHINGTON — In a comment letter to the Office of Thrift Supervision, CUNA said the regulator's proposed rule to expand savings and loan holding companies' authorities does not provide sufficient transparency, similar to credit union to mutual savings bank conversions.
The OTS has proposed expanding the powers of SLHCs to the full extent permissible under the Home Owner's Loan Act and replacing the prohibition on certain SLHC transactions with a prior approval requirement, and a SLHC's acquisition of more than 5% of a non-subsidiary institution.
The proposal would allow SLHCs to engage in many of the activities that are permitted for bank holding companies without noting the procedural requirements, according to CUNA Senior Assistant General Counsel Jeffrey Bloch's comment letter. "The procedural protections that apply to bank holding companies serve important public policy purposes. For instance, certain bank holding company activities are subject to a public notice and comment process, and we believe this should also apply to SLHC activities. Public notice and comment provides needed transparency for certain types of transactions and ensures that the views of all the interested parties are represented."
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Acquisition applications will be subject to publication, comment and meeting requirements, which CUNA "fully supports." However, the reg would require public notice only in the community where the acquired institution is located and possibly the community where the acquirer's largest subsidiary savings association home office exists. Bloch recommended, "CUNA believes that OTS should undertake greater efforts to ensure that information regarding SLHC activities and acquisitions is widely disseminated on a national basis to those in the financial services industry who are interested in following these activities and that such an approach should apply for all transactions that OTS is required to approve."
He said this principle should apply to all types of significant transactions. "A similar example would be transactions in which a credit union pursues a conversion to a mutual savings banks. CUNA's position is that although the credit union structure is best for consumers in terms of favorable loan rates, savings rates, and its democratic structure that permits each credit union member with an equal vote, CUNA also respects the credit union management's right to pursue an alternative structure if it will better serve the members' needs," Bloch stated. "However, CUNA firmly believes that the decision to convert, and the benefits of the conversion for the members, must be clearly disclosed in a manner that will allow members to carefully consider whether the conversion would be appropriate."
CUNA also has concerns with the OTS' meeting provisions. "These provisions allow OTS discretion as to whether it would be appropriate to meet with the applicant and other interested parties with regard to a specific application. We believe such a meeting should be mandatory, especially if a commenter raises an objection to the specific transaction and all commenters should be invited to the meeting. These meetings are important in order to adequately discuss and address how these transactions benefit consumers, affect competition, as well as other factors that may not be addressed in the written documentation." –[email protected]
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