WASHINGTON -
"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 of whom are paid substantial retirement benefits as part of a merger. Such compensation is currently kept secret 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.
It may include a severance package or retirement pay or life and other insurance benefits, often in the six-figures. NCUA has expressed concern that such promises of compensation could affect merger decisions, to the detriment of members.
In its 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," Dunn said.
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.
The proposals come as the internal proceedings of credit unions are coming under increasing fire; during conversions to mutual savings banks, or the recent hostile takeover battle between two airline credit unions.
Congress has also raised the issue of transparency among credit unions. And a study issued last year by the General Accountability Office, the chief auditor for Congress, recommended that credit unions make more information generally available on executive compensation, just as publicly owned corporations are being required to do.
