Proposed new regulations on mergers and mutual bank conversions encroach on state autonomy, place burdensome regulations on credit unions and wouldn't necessarily protect the interests of credit union members.
Those are among the arguments made in letters to the NCUA by CUNA, NAFCU, NASCUS and American Share Insurance.
The NCUA's proposed rules say that board members of federal credit unions could only get limited exemption from being sued for some of their actions, FCUs seeking to convert to banks would have to get an independent evaluation and board members and employees couldn't assist members in filling out ballots during conversion votes.
Mary Mitchell Dunn, CUNA senior vice president and deputy general counsel, wrote that the approach "would be redundant with existing state law fiduciary duties." ?NASCUS Senior Vice President for Regulatory Affairs Brian Knight complained that with regard to the actions of state-chartered credit unions. the agency is "exceeding its statutory mandate."
Both Dunn and Carrie Hunt, NAFCU senior counsel and director of regulatory affairs, criticized the NCUA proposal that bans board members indemnification. Dunn said a blanket ban would make it harder for credit unions to recruit board members.
Hunt wrote that her organization "does not believe it is appropriate for the agency to impose this limitation."
Both also criticized the NCUA's proposed requirement to mandate financial literacy as a fiduciary responsibility of board members.
Hunt said the requirement is "open to interpretation" and could lead to an increased number of lawsuits. She recommended instead that agency publish a guide for directors that includes financial literacy and recommendations for volunteer training.
CUNA and NAFCU praised the provision of the proposed rule that mandates that if a credit union is considering a bank conversion, the board and its executives must break down the costs of converting and distribute it to members and provide "complete and accurate" information about possible changes in service, such as branch closings or access to a shared branching network. The board must also seek an independent outside appraisal and any vote on the matter must be done via secret ballot and the voting must be conducted by an independent entity.
American Share Insurance President/CEO Dennis Adams took issue with some of the proposed rules governing balloting in elections on converting to private insurance. He said the proposal to require credit unions to send out reminder notices at various points during the 30-day balloting process if it looks as if 20% of the membership isn't voting would cause compliance costs to increase $5.00 per member.
For further information on the proposed rule and to read comments go to www.ncua.gov.