Leagues, Agency Debate Response To Conversions
While hot topics like banker attacks on the credit union tax exemption were the headliners at the AACUL Annual Meeting here, issues related to the number of credit unions seeking to convert to bank charters reared its head, as well.
NCUA Chairman Dennis Dollar touched on the issue during his presentation, noting his desire to increase the disclosure requirements for credit unions when they ask their members to vote on a conversion. And the issue came up again during the Q&A after Dollar's and NCUA Board Member Deborah Matz's presentations.
New York State Credit Union League CEO Bill Mellin asked Dollar to expand on the topic, and suggested that one way to change the disclosure standards could be to require credit unions to offer members the opportunity to take back the capital they have helped to build in the form of a liquidation rather than a conversion.
"It is the members who have built the 11% capital in America's credit unions," Dollar observed. "Tragically, that capital that members have sacrificed to help build often ends up going to others."
But Dollar said there is no statutory authority for NCUA to require the liquidation of a credit union and its capital prior to a conversion, and the Office of Thrift Supervision, which usually inherits former credit unions after they have converted, obviously would never allow such a thing to happen. As a result, he said there is little support to provide such authority to NCUA.
But the question of "whose capital is it anyway" and where does that capital end up after a conversion is "a powerful argument to make when members are voting on a conversion," Dollar suggested.
While the chairman is an advocate of revamping the disclosure requirements for credit unions seeking to convert, Dollar noted that it will be important to proceed with caution on that front, lest such efforts end up backfiring. "Make disclosures too long, and members will be overwhelmed," he said. "We want them to be clear and concise."