WASHINGTON -- The credit union industry's top regulator blasted the Office of Thrift Supervision on Wednesday for casing restrictions on credit union conversions to thrifts.
"I don't really know if it is proper for an agency, which the administration and others plan to merge out of existence, to be seekmg to expand its tuff," National Credit Union Administration Chairman Norman E. D' Amours said in a brief statement.
In an unusually sharp criticism of a fellow regulator, Mr. D'Amours added: "The last time I checked, many thrifts, especially the state charters, were trying to escape OTS because it was a very expensive and cumbersome agency.
"I find it very hard to believe that OTS may be attempting to replace its lost thrifts with credit unions," he concluded.
In a regulation adopted late last month, the OTS made it easier for credit unions to merge with thrifts by explicitly stating that thrifts could merge with institutions not insured by the Federal Deposit Insurance Corp.
The thrift regulator' s new regulation is intended to make it easier for any depository institution to change charters, and wasn't aimed at credit unions, said OTS spokesman Bill Fulwider.
"OTS is opposed to both competition among chartering agencies and artificial barriers to conversion," Mr. Fulwider said.
Mr. D'Amours is maintaining the hard line the agency has taken against conversions since discovering late last year that some law firms were peddling the transactions to credit umons.
Since spring, the agency has criticised lawyers pushing conversions and told them to stop; seized one credit union that was contemplating conversion; and stepped up supervision of Newark, N.J.based Lusitania Federal Credit Union. the first credit union to apply for a thrift charter.
In the latter two cases, the agency denied it was trying to hamper charter conversions.
That hard line is expected to continue at the Sept. 16 open board meeting in Salt Lake City, at which the board will consider an interim rule giving it final say on any conversion. And for the second time it will put out for comment a proposal governing the transactions.
"Our main purpose is to put the clear statement into our regulations that for a credit union to merge or convert to any non-credit-union institution requires the approval of the board," said NCUA general counsel Robert M. Fenner.
The agency is seeking more comments in preparing a final rule because the issue is more complicated than it had thought, Mr. Fenner said. The agency put out its first proposal in June.
One question the agency will raise is whether credit union members have the right to change the institution's charter, Mr. Fenner said. Earlier, regulators had maintained that conversion is acceptable as long as it isn't motivated by financial gain by a group of insiders and as long as members approve.
Mr. Fenner said it will be difficult for credit unions to convert until a final rule is issued, which could be next year.
OTS officials could .not be reached for comment.
