CUNA Opposes NCUA Bid on More Transparency

WASHINGTON – CUNA called on NCUA yesterday to reject a proposal to open up the merger process to more disclosures on the exchange of compensation among participating executives, one of several proposals NCUA has made to increase the transparency of credit unions. “In our view, NCUA has not provided adequate substantiation to credit unions as to why the rule is necessary,” said CUNA in a comment letter signed by Mary Dunn, deputy general counsel. In proposing the rule, NCUA is seeking to make available to members any material compensation paid to senior executives of merging credit unions, some whom are paid substantial retirement benefits as part of a merger. Such compensation is currently secretive and is rarely made public, but is common practice when a smaller credit union is merged out of existence and the manager goes into retirement. NCUA has expressed concern that such promises of compensation could affect merger decisions, to the detriment of members. In their comment letter, CUNA said NCUA has not demonstrated how it came to set a threshold of materiality for disclosures, and the proposal could open up credit union pay figures to individual members, adding to regulatory burden. If adopted, the disclosure “could have a chilling effect on mergers,” said Dunn. The proposal is one of several major rules issued for comment aimed at opening up credit union operations to members. Another one would set out the rules for member access to records of board and management meetings. Another one would allow NCUA to enforce credit union bylaws, including those on access to records and other disclosures.