ALEXANDRIA, Va. -
NCUA ignited the uproar by proposing a number of initiatives aimed at bringing greater transparency to the internal workings of credit unions. Credit unions have been largely immune to the regulatory movement, spurred largely by the corporate scandals at Enron, WorldCom and other public companies, to bring greater transparency to management decisions.
The NCUA bid was spurred by credit union scandals of another sort, where management and boards have manipulated credit union resources to engineer conversions to mutual savings banks–often at significant costs to the institutions–trumping members who opposed such charter switches.
Among those cases were in Vancouver, Wash., where members of Columbia CU who defeated the credit union’s bid to convert to mutual savings bank fought unsuccessfully in the state courts to have their member access bylaws enforced. Or in Dearborn, Mich., where members of DFCU Financial also failed to have a state court enforce their bylaw rights in a dispute that led to the withdrawal of that credit union’s conversion. Similarly, in Kensington, Md., members of Lafayette FCU also were unable to get a court to enforce their rights.
More Access To Records
The NCUA proposals would give rank-and-file members greater access to books and records of internal board and committee meetings where such major decisions were being contemplated.
Over the objections of a vast majority of credit union commenters, including CUNA and NAFCU, NCUA approved a rule that will allow any group of members to petition for access to internal records for legitimate reasons, as long as the access would not harm the credit union, its members or employees.
NCUA Chairman JoAnn Johnson, who proposed the rule, emphasized her aims. “The members of the federal credit union own the credit union,” said Johnson. “As owners, the members have the right to inspect the credit union’s books, minutes and records when they have a proper purpose.”
Equally irritating to credit union management was another proposal which would require credit unions to disclose management compensation in mergers, a murky area in which managers are often paid golden parachute retirement packages to merge their credit unions. That proposal is still pending.
