WASHINGTON – The federal depository regulators yesterday agreed to new standards on charter swapping that will make it much harder for troubled institutions to convert charters.
NCUA and the other four members of the Federal Financial Institutions Examination Council issued a joint statement that they will only consider applications undertaken for legitimate reasons and will not entertain regulatory conversion applications that undermine the supervisory process. The prospective supervisors will follow existing supervisors’ work on examination and enforcement actions, including consumer protection and safety and soundness issues.
That means that for institutions rated CAMEL 3, 4 or 5 or that have a serious or supervisory agreement in place or one being contemplated the existing regulator will be given additional reverence.
The regulators said they expect that ratings assigned under uniform rating systems and outstanding corrective programs will remain in place following a charter conversion.
The new policy comes as at least four credit unions are in the process of converting to mutual savings banks, and one, Beehive CU was rejected by thrift regulators for a savings bank charter after it reported a $1.8 million loss for the fourth quarter of 2008.
