NASCUS Praises New Conversion Reg But Sees Need For Tighter Controls
The National Association of State Credit Union Supervisors praised NCUA"s approval of tighter rules for credit unions seeking to become mutual savings banks, but was disappointed NCUA didn't adopt its recommendation for stricter rules related to the votes on such conversions.
The new rule, Part 708a, is designed to ensure members are informed and understand the significance of conversions, making clear and concise disclosures a necessity.
NASCUS was also pleased with NCUA's rule with regard to "states' rights" issues.
"This is compatible with NASCUS' longstanding position that NCUA should defer to state-specific conversion rules, and we note the agency's acknowledgement that 'state law and/or State Supervising Agencies (SSAs) may impose conversion requirements more stringent or restrictive than NCUA's,'" noted NASCUS, citing the line in the rule that reads: "'In fact, NCUA understands over half the states do not specifically permit conversions of credit unions to MSBs. Reflecting NCUA's support of the dual chartering system, NCUA will defer to a state regulator when appropriate on questions involving interpretations of state law."
NASCUS said it would like to have seen the agency adopt its suggestion that a CPA firm other than the one with an ongoing relationship with the credit union or a reasonable third party be allowed to conduct the vote. "Allowing a CPA firm not on record with the credit union to conduct the vote provides such impartiality and flexibility while accomplishing the same result, potentially in a less costly manner," NASCUS said.
In other news, NASCUS also had priase for NCUA's adoption of Final Rule Part 708b, which concerns mergers of federally insured credit unions and the voluntary termination or conversion of insured status of a credit union. "NASCUS is strongly supportive of the pro-consumer language contained in Rule 708b regarding information and disclosures," the association said. "NASCUS Board, NASCUS state regulators and Credit Union Council members were instrumental in facilitating discussions with NCUA Board members and helped to craft changes to the proposed Rule, Part 708b."
The final rule eliminates the requirement that NCUA approve all communications prior to a proposed conversion of private insurance; eliminates the requirement that FDICIA-type disclosures about non-federal insurance be placed on the front page of a credit union's website; removes the requirement for converting credit unions to represent affirmatively that they will comply with all of FDICIA's requirements relating to disclosure by non-federally insured CUs; changes the ballot requirements so that the votes for and against conversion are of equal size and type; and allows members to withdraw funds from term accounts in the amount of up to $100,000 per account, without penalty.