AUSTIN, Texas — The feedback coming in on a proposal that addresses unsolicited mergers initiated by the Texas Credit Union Commission has been eerily scant.
Endorsed by the Texas Credit Union League, the proposed rule would prohibit a credit union from offering a merger inducement to another credit union's members as a means of promoting a merger of the two credit unions. The commission announced the proposal at its June 15 meeting and sought feedback from credit unions during a comment period that ended July 29. At press time, only three Texas credit unions wrote comment letters, which are being tracked by Betsy Loar, general counsel at the Texas Credit Union Department.
Loar said the letters are not available for public viewing at this time, but will be sent to the Legislative Advisory Commission's meeting on Sept. 21. The Texas Credit Union Commission is planning to review the proposed rule at its Oct. 19 meeting. Although the July 29 deadline for comment has passed, Loar said credit unions can still submit feedback, but letters will not be submitted to the commission as record.
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Meanwhile, the commission is still planning to move forward with the proposal, said Gary Janacek, chairman of the Texas Credit Union Commission and president/CEO of $27 million Scott & White Employees Credit Union. While there are protections currently in place to protect Texas state-chartered credit unions from a merger campaign similar to Wings Financial Federal Credit Union's, there may be room for "added protections."
"Our primary concern is that the credit unions and regulator are totally involved in the process so that everything is on the up and up," Janacek said. "There are certain layers of procedures credit unions need to understand before they go through the merger process."
One of those "added protections" includes the 2006 enactment of new rules regarding credit union conversions in Texas. Last June, commissioners voted unanimously to implement rules requiring state-chartered credit unions seeking to convert to a mutual savings institution to provide early notification to the membership prior to a board vote on the issue. Texas credit unions must now clearly define on a conversion ballot that a "yes" vote means the credit union will convert to a mutual savings association, thrift or bank, and a "no" vote means the credit union will remain a credit union. The rules came after the fervor surrounding Texas-based Community Credit Union's lawsuit in 2005 against NCUA for invalidating the credit union's process for converting to a mutual savings bank. Community CU has since converted to ViewPoint Bank.
Richard Ensweiler, president/CEO of the Texas Credit Union League, said so far, no credit unions "seemed to be taking this tact" and "mergers we are aware of in Texas are cordial."
In early March $1.8 billion Wings Financial FCU sent a merger proposal to $182 million Continental FCU, which turned down the plan. Wings Financial continued to court Continental's membership with a campaign that lasted nearly a month and a half. NCUA essentially stopped the campaign in mid-April when it ruled that $200 payments Wings Financial had promised to Continental's members were impermissible under the Federal Credit Union Act.
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