Ensweiler Has Praise (For NCUA) And Critics (For Comments)

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The man who has been taking some of the most heat over the proposed conversions of two Texas credit unions was thrilled to hear of NCUA's action voiding the disclosures statements, essentially sending both credit unions' conversion plans back to the drawing board.

Ironically, the man in question is not the CEO of either Community CU or OmniAmerica CU-it's Texas CU League CEO and CUNA Chairman Dick Ensweiler, who has been berated by several well-known credit union leaders both privately and in public for his league's perceived lack of action to block these conversions.

"Apparently, instead of working on important credit union legislative proposals, they want someone to work on stopping these conversions," Ensweiler related. "I am impressed by NCUA's action, and this is exactly the way the process should work. This is a significant change in charter, and the least we can expect of these credit unions is that they will follow the disclosure rules to the letter. And if members don't understand those disclosures or file a complaint about them, then there is a process to stop it, and it's great to see NCUA responding to these issues."

State regulators are also investigating after a complaint was filed by a coalition of Community Credit Union members (see related story, page 1).

But regulators aren't the only ones responding. The Texas Credit Union League had appointed a task force to study the conversion issue, and after having made its recommendations, the committee had been dissolved. Now there is talk of resurrecting that group.

"There's been so much comment on this and so much hyperbole, that I have asked that we reconstitute the committee to look at it one more time to determine if there's anything we should do different," Ensweiler told The Credit Union Journal.

During his testimony before Congress on the Credit Union Regulatory Improvement Act, Ensweiler discussed the importance of regulatory reform in general, and addressed the issue of a change in the capital requirements that trigger NCUA's Prompt Corrective Action provisions.

The issue of raising capital has been a primary reason cited by credit unions seeking to convert to mutual bank charters.

"No lawmakers have asked me about the conversion issue specifically," Ensweiler noted. "But Congressman Jeb Hensarling did ask me during my testimony if it would be helpful if we picked up the PCA and reserve requirements. It was encouraging that the question was asked."

During his testimony, Ensweiler said "without CURIA more credit unions will feel forced to consider converting to a thrift or bank, and millions of Americans will be deprived of a credit union able to respond to their needs."

But even just that brief exchange has drawn the ire of Ensweiler critics, this time from the Coalition for Credit Union Charter Options, a group of former credit union CEOs whose institutions converted to bank charter (see related item, page 1).

"It's wishful thinking," said Lee Bettis, executive director of the coalition, and a former CU CEO. "The legislation would change the level of net worth a credit union needs to be classified as 'well' or adequately capitalized, and present a 'dual ratio' method for Prompt Corrective Action that introduced a risk-based approach to safety and soundness oversight. Neither provision adds a single dollar of new capital. It's just tinkering. And to the extent it allows for more asset growth on a given body of capital, it increases systemic risk in the credit union industry."

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