ALEXANDRIA, Va. — NCUA recently reiterated that it has not issued a prepared proposal regarding "hostile" takeovers within the credit union industry contrary to published reports.
However, the agency is "looking at all the issues and the board will decide what to consider," said Cherie Umbel, NCUA spokeswoman. She reiterated that NCUA is not looking at any specific possibilities at this time.
"There is no prepared proposal. We always welcome public input. Everyone should be free to tell us what they think," she said, but right now, there has not been a formal request for feedback on hostile takeovers even though several leagues, CUNA and NAFCU have initiated commentary in the past.
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In mid-April, NCUA put a stop to Wings Financial Federal Credit Union's merger campaign towards Continental Wings Federal Credit Union when it found that the $200 payments Wings Financial had offered to Continental's membership should a merger go through were impermissible under the Federal Credit Union Act. Wings Financial, which continues to invite Continental's members to join, launched a nearly month and a half campaign on March 9 that included a merger proposal turned down by Continental's board.
Umbel said the agency's current position ties into a speech given by NCUA Chairman JoAnn Johnson at this year's CUNA Governmental Affairs Conference on whether and to what extent NCUA should enforce FCU bylaws. Johnson emphasized that NCUA never lacked authority to enforce bylaws based on the FCU Act, but rather "opted to leave much bylaw enforcement to members and FCUs."
But "what we have seen this past year, in particular, is that this position has resulted in little to no enforcement of some of the members' most critical rights the bylaws seek to protect," Johnson told GAC attendees in February. "State courts are understandably reluctant to become involved in bylaw disputes. The time and expense required for legal action also makes it an unrealistic option in many cases."
Indeed, at its May 24 board meeting, the board issued a proposal to once again incorporate the FCU bylaws into NCUA regulations. Incorporating the bylaws into regulation ?701.2 by reference clarifies NCUA's ability to use its administrative authority, when appropriate, to enforce FCU bylaw compliance, the board said. The proposal would also add a new bylaw on director succession, revise the introduction to reflect the bylaws' status as a regulation, and include a streamlined process for adopting bylaw amendments previously approved by another FCU.
For decades, the bylaws were incorporated into NCUA regulations and a bylaw violation could therefore be handled as a regulatory violation, Johnson said. In the early 1980′s, NCUA deregulated the bylaws and began a policy that has continued until now, namely, that NCUA would not intervene in bylaw disputes unless a matter presents a violation of the Act, NCUA regulations, or a safety and soundness concern. Johnson pointed out that between 1934 and 1982 when bylaws were a part of NCUA's regulations, "NCUA did not routinely intervene in ordinary, operational activities that make up the day-to-day life of a credit union."
"Let me assure you, the last thing NCUA wants to do, or frankly is able to do, is to get involved in every technical violation of the bylaws," Johnson said at the GAC.
At NCUA's May 24th meeting, the board stressed that "reincorporating the bylaws in the regulations imposes no new regulatory burden because all FCUs are required to have NCUA-approved bylaws."
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