Plan Would Ease Way from Credit Union to Thrift

The Office of Thrift Supervision wants to make it easier for credit unions to become federal mutual thrifts.

"Depository institutions should be free to operate under whatever charter they deem best suits their business needs," OTS Director Nicolas P. Retsinas said in a prepared statement released late Wednesday.

Credit unions, which are mutually owned, currently must file two applications with OTS before becoming a mutual federal thrift. First, they must apply to obtain a new federal mutual savings association charter. Then, they must file a separate application to merge the credit union into the new thrift. The proposal would eliminate this second step.

The OTS already permits commercial banks to convert directly to a federal stock thrift charter. Similarly, state-chartered mutual savings banks may convert to a federally chartered mutual thrift in one step.

"The agency has historically wanted to streamline as much as possible the process for getting a thrift charter," said Dwight Smith, OTS deputy chief counsel. "This is just the last piece of that puzzle."

Credit unions that apply to become mutual thrifts would still be required to obtain permission from the National Credit Union Administration to abandon their charter, Mr. Smith said. They also would be required to file an application with the Federal Deposit Insurance Corp. for deposit insurance.

OTS will accept comments on the proposal until June 9.