Congress Turns Eyes To CU Conversion Issues
Lawmakers on the House Financial Services Committee have renewed their interest in credit union conversions to mutual savings banks, in light of the new controversy over DFCU Financial.
While the issue appeared to be laid to rest last year after Texas credit union giants Community CU and OmniAmerican CU were allowed to convert-after a long legal and regulatory battle-the new fight over DFCU has rekindled interest.
The Financial Services Committee is expected to hold hearings on the issue next month when NCUA's role in the process will be reviewed.
The hearings are sure to bring back to life a bill proposed by Rep. Patrick McHenry, R-N.C., during last year's Texas controversy. That bill would limit NCUA's powers over conversions.
But the McHenry bill has little chance of passing this year, as time is running short on the congressional calendar and congressional elections are looming.
Still, the prospect of Congress looking over its shoulder has to be unsettling for NCUA, which came under severe criticism by lawmakers last year, several of them from Texas.
That scrutiny was intensified after a federal court in Texas ruled that NCUA overstepped its authority when it rejected balloting for the two Texas credit union conversions.
That forced NCUA to reverse itself and approve the conversions.
Such scrutiny comes as NCUA is involved in several legal challenges brought by the banks which could embarrass the agency even more.
One of the issues expected to be raised during the hearings is whether NCUA is acting as an impartial regulator in overseeing these conversions, or whether NCUA has lent its support to credit union members and the organized credit union movement who oppose the charter switches.
Lobbyists representing DFCU Financial, the same ones who represented Community CU, are working Capitol Hill to ensure that NCUA is watched closely during the process.