NCUA Chair Stresses Need For More Disclosures To Members
As the subject of proposed legislation that would weaken NCUA's oversight of conversions to bank charters, Chairman JoAnn Johnson told Congress:
"A credit union is owned and governed on a democratic, cooperative basis by the members. It is the member-owners, not NCUA or any other group, who should decide the future of their credit union," Johnson said. "NCUA fully supports the right of credit union members to decide the business model that is most appropriate and beneficial to them, and whether a charter conversion serves their best interest. In that regard and in the interest of basic consumer protection, NCUA strongly believes that the member-owners deserve to receive information about the conversion of their credit union to another form of financial institution that is accurate, complete and understandable."
Johnson reiterated what other witnesses also noted, that much of what's occuring with charter conversions is of Congress' own doing, as the Credit Union Membership Access Act (CUMAA) changed the majority of members needed to approve a conversion to a majority of voters. She noted that in the eight years since the first post-CUMAA conversion rule was issued, NCUA has refined the rule three times, each time "motivated by the same basic concern, namely, that members receive accurate and complete information to make an informed decision on a conversion proposal."
Johnson called the disclosure of information to members "basic and fundamental consumer protection. Additionally, it maximizes the ability of members to exercise real control over an institution that they not only own but to which they have contributed in the accumulation of owner equity."
Johnson said the agency supports two provisions of H.R. 3206, The Credit Union Charter Choice Act-the requirements for a secret ballot and an independent inspector of elections-but said that many of the provisions of the bill will prevent the agency from achieving the goal of allowing informed credit union members to select the type of charter that best serves their needs.
"Absent NCUA's authority to administer the vote, there would be no consequences for violations of the conversion notice and voting requirements," said Johnson. "NCUA's oversight protects members' right to complete and accurate information, and this role should be preserved."