NAFCU Wants To See Far Greater Transparency
North Carolina has always been something of a thorn in the side of the credit union community. While home to some of the most progressive credit unions, the Tar Heel State is also home to the bankers who put in motion the turmoil that led to HR 1151, and to Rep. Patrick McHenry, who is challenging NCUA's authority over charter conversions with a proposed bill.
Perhaps for that very reason it was a North Carolina CU CEO who testified on behalf of NAFCU during hearings on charter conversions. Marcus Schaefer, CEO of the $1-billion Truliant FCU, told Congress NAFCU believes that credit unions should have the ability to convert their charters should it be in the best interest of the members.
"NAFCU also believes the only way to ensure that the conversion process is fair is to make sure the process is transparent so members are adequately informed of the potential benefits and potential detriments that a conversion may have on the interests of the membership," he said. "NAFCU also supports the ability of NCUA to use all of its powers, as granted by Congress, to effectively regulate federal credit unions, including ensuring that conversions take place in a fair manner and that adequate consumer protections are in place."
The kinds of specific transparency NAFCU supports, according to Schaefer, include:
* A credit union should be required to hold a meeting of its membership, prior to the mailing of the ballots, to announce intent to convert.
* Resources should be allocated, or an opportunity should be provided, for members opposed to the conversion to express their concerns.
* Clear, plain language disclosures should be used to inform members of the vote to convert.
* Directors and/or senior management of a converted credit union should not be able to benefit financially from the transaction until at least 10 years after the initial conversion has taken place. Furthermore, there should be full disclosure of the potential maximum benefit a director or senior management could receive if the converting credit union were to convert to a stock bank after the 10-year period.
* A minimum of 20% of a credit union's members eligible to vote should cast a ballot in the vote taken to convert and a majority of those credit union members must vote in favor of the conversion. He noted that prior to 1998, federal law required a minimum of 20% participation in order for a conversion to go forward.