WASHINGTON – In response to a proposal sent out by the Federal Housing Finance Board, CUNA and NAFCU wrote in support of the board providing more information on directors' experience and skills in the Federal Home Loan Bank Board election process and including credit union representatives on the boards.
"NAFCU supports the FHFB's proposal to authorize the Banks to notify members during the nomination and election process of the expertise and skills which make for strong, knowledgeable and informed directors," President and CEO Fred Becker said. "However, NAFCU encourages the FHFB to standardize the information that the Banks provide to their members about the expertise and skills that are useful for a board member to possess. Standardization would help to ensure that individual Banks do not focus exclusively on a narrow range of technical expertise and skills at the expense of other valuable characteristics."
He continued, "One such characteristic is the diversity of financial institution charter types represented on the Bank boards. Our research shows that there were 846 credit union FHLB members at the end of 2005, approximately ten percent of the total FHLB; yet, credit unions are not represented on any of the Federal Home Loan Bank boards. Credit unions are member-owned, not for profit, non-stock depository financial institutions managed by volunteer boards. As such, they are unique among financial institutions and possess valuable information about the financial needs of existing and potential homeowners among the more than 86 million credit union members living across the nation. In view of this deficit, NAFCU strongly encourages the FHFB to consider diversity regulatory requirements to achieve credit union representation on FHLB boards."
CUNA agreed. "The current structure severely limits the ability of credit union representatives from serving on any of the Bank boards of directors," Senior Assistant General Counsel Jeffrey Bloch wrote. "Because credit unions only comprise a small minority of the membership, it is extremely difficult for a credit union representative to be elected as a director. While credit union officials can be appointed by the FHFB, such directors cannot be employed by or serve on the board of a Bank member institution while they are serving on the board of the Bank in their district."
He suggested a change in the law to require a limited number of directors come from minority stockholders, possibly including elimination of this last stumbling block.
On the actual proposal, CUNA supported "transparency in the election process," but the member banks should have a say in this process. -scooke@cutimes.com
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