The applications by three Utah credit unions to convert to federal charters have become the most guarded secrets at NCUA.
The three credit unions, America First CU, Mountain America CU, and Goldenwest CU, were the center of the storm in Utah where a banker-inspired initiative that would have applied new taxes was defeated. But that did not end the threat, as a legislative task force is now studying the matter and is expected to press forward with some kind of tax proposal. A federal charter would shield those credit unions from the kind of taxes contemplated by some lawmakers in Utah.
The applications, filed shortly after a bid to tax the three failed in the state legislature, are currently the target of several inquiring entities which have filed Freedom of Information Act requests with NCUA asking for a chance to review the documents.
The credit unions have each indicated a non-willingness to divulge their intentions. All three credit unions have refused to return phone calls from The Credit Union Journal seeking comment.
But in an unusual effort to guard the documents, NCUA has notified The Credit Union Journal that since the applications, detailing the credit unions' field of membership (FOM) requests, among other things, "may contain commercial information protected from disclosure under the FOIA," NCUA will first give those three credit unions an opportunity to decide what, if anything, will be disclosed publicly.
NCUA, which is usually cooperative on FOIA requests, said in its response to our FOIA request, "before we can disclose confidential commercial information we must provide a submitter of such information (the three Utah credit unions) with notice and an opportunity to object to any disclosure 'which the submitter claims should reasonably be expected to cause substantial competitive harm.'"
NCUA, the agency goes on to say, will then make a determination whether to disclose the information. The disclosure could then be subject to a court challenge if the submitter (credit unions) object. "The submitter," said NCUA, "may then proceed to federal court for a protective order if it believes that our decision to release the submitted information was incorrect."
There's only one problem with this approach, even with the controversy surrounding the conversion applications, in dozens of other FOIA requests filed by The Credit Union Journal requesting charter applications in process, NCUA has never allowed the credit unions to decide what will be disclosed and has routinely provided this newspaper with application information in process. I have hundreds of pages of such disclosures piled on my bookshelf to prove it.
This, of course, puts The Credit Union Journal in a difficult position. If we point out this discrepancy in treatment, will NCUA assert that the treatment of the Utah credit unions is the correct one, thereby tying The Journal up in the same legal knots every time we request information on pending applications? Or do we pursue the Utah information, even though we know that by the time we are able to drag the documents out of NCUA the application process will probably be complete?
Any one who has ever engaged in the FOIA process knows that the federal agency always has the upper hand. Unless those of us seeking the information want to engage in the time consuming and potentially expensive legal process of challenging the FOIA experts at NCUA on their legal claims, there isn't much we can do but accept the agency's ruling.
This information is obviously of great public interest. It will illustrate to other credit unions seeking a federal charter how NCUA may treat their requests. That is why this information is being pursued by several sources in the credit union movement and among the bankers (the American Bankers Association has also filed a FOIA request for the documents).
This raises another question: from whom is NCUA trying to keep this information? Is it other "competitors" of the three credit unions? Not likely, since once the conversions are finalized, as expected, the information will become widely known. Or is it the bankers, who are seeking to put up roadblocks to the conversions?
Among the things the bankers want to know are whether the FOM requests conform with NCUA's own rules and regulations. But credit unions want to know the same thing, if for no other reason than to determine how the might fit into NCUA's FOM standards if they also decide to convert to federal charters.
It seems to me the public would be best served by NCUA complying with this FOIA request. And there would be minimal, if any, harm to the three applicants.