RALEIGH, N.C.-Some state-chartered credit unions here are considering converting to federal charter following a dispute between the state regulator and NCUA.
"Some credit unions have said that may change their charter so they don't have the burden of dual exams," said John Radebaugh, CEO of the North Carolina CU League. "I have cautioned them that changing charters needs to be a business decision, not an emotional decision."
At issue is a decision by NCUA to no longer work with the North Carolina Credit Union Division after the state agency approved State Employees CU to disclose its CAMEL rating (
"There are going to be problems if these two regulators can't work together," said Radebaugh. "There are going to be conflicting examiner reports, and then credit unions won't know which examiner they should listen to. It's a real burden, and it will wear on credit unions, especially on small credit unions, and over time, they may well determine it's best for them to change charters."
All of that worries Radebaugh. "We have one of the strongest dual charter systems. Our state Credit Union Act is very credit union-friendly, and we are one of the few states where we have a credit union regulator that is separate and independent from the bank regulator," Radebaugh explained. "If enough credit unions change charters, it's possible the state legislature would question whether it is worth continuing to have a separate credit union division."
Letter Sent To Agencies
The league has sent a letter to the North Carolina CU Division and NCUA imploring the two to resolve their issues.
"Obviously, what credit unions are most upset about is the burden of having two exams, but it goes beyond just that," Radebaugh said. "Credit unions felt blind-sided when they started receiving calls from NCUA examiners calling to set up exams with no prior notice about what was happening and why. It wasn't until several days later that they heard from either of the agencies what this was all about."
In a letter to NCCUD Adminstrator Jerrie Jay and NCUA Region III Director Herb Yolles, Radebaugh wrote, "Many have voiced their opinion that NCUA was trying to send a message to the NCCUD by bullying state-chartered credit unions that had nothing to do with the issue of disclosure of a state CAMEL Code."
Thus far, Radebaugh said he hasn't heard any CUs pointing fingers at SECU or its well-known CEO, Jim Blaine, reserving their dissatisfaction for the two regulatory agencies. SECU had requested permission from the state regulator, which in turn had received the OK from the state attorney general, before disclosing its CAMEL 2 rating.
The league held a town hall meeting with the NCCUD and is working to set one up with NCUA.
"I'm not sure credit unions have any other recourse, other than to try to get these two back together," Radebaugh said, noting that he's not sure it would make sense to try to get Congress and/or the White House involved. "Forcing them to work together would be like forcing a divorced couple to get remarried."
NCUA and the state regulator did not return calls by press time.
