Conversion Rules Changes Planned
The Texas Credit Union Department hopes to have a draft of proposed changes to its credit union-to-bank conversion rules some time next month, according to Kerri Galvin, assistant commissioner and general counsel of the TCUD.
The department decided it was time to revisit its conversion rules after the proposed conversions of Community CU, Plano, and OmniAmerican CU, Ft. Worth, stirred up controversy regarding the way conversions are governed.
"Without tipping my hand too much, it would seem there needs to be more explanation [of plans to convert] on the front end of the process," TCUD Commissioner Harold Feeney told The Credit Union Journal in September. "The way it can be done now, the special meeting only has to be called for the vote, so if that's the only opportunity for members to ask questions or make comments, it's too late."
Take Community CU as an example. As was required by the existing regulations, CCU sent out notices with the required disclosures and ballots. Credit union members could-and in some cases did-call, write or visit the credit union during the balloting period to ask about the conversion, but there was no formal opportunity prior to the ballots being sent out for members to learn more about the plan.
And although the credit union's annual meeting happened to occur during this same time period, no discussion of the conversion was allowed at that meeting.
By the time the credit union held its special meeting for the final vote on the conversion, there was nothing to discuss: some 30,000 ballots had already been mailed into the credit union. So even though CCU did allow for questions and comments from members during the special meeting, the decision to convert had long since been made, even if no one yet knew what the outcome of the vote would be.
Though CCU's and OmniAmerican's conversions have been determined to have been handled properly given the existing regulatory framework, the controversy surrounding these conversions led the TCUD to hold several public hearings and forums and to establish a working group to put together a draft of proposed changes to the conversion rules.
"It's would be premature to discuss the nature of the changes we are exploring as we are still trying to work toward consensus," Galvin said. "The working group is still working on the draft, and it will work through the issues that were raised-on both sides-by those two conversions."
The working group is made up of CU CEOs, CU trade associations and TCUD staff.