ALEXANDRIA, Va. – NCUA yesterday began the process of writing rules to govern new and emerging types of credit union transactions, including hostile credit union takeovers and the acquisition of a credit union by a commercial bank or other entity. The proposal was prompted by growing concerns of member rights in such transactions, especially last year's unsuccessful hostile takeover of Continental FCU by Wings Financial FCU.
"This is one of the most important ANPRs we've put out since I've been here," said NCUA Chairman JoAnn Johnson. "It goes to the heart of the issues of members’ rights and their ownership interests."
As part of the ANPR, NCUA is collecting public comments on what should guide the regulatory process on the proposal by one credit union to acquire another whose board has rejected the merger offer, as was the case in the Continental/Wings controversy. In that case, the board of Wings had suggested several times that the two credit unions merge, but the Continental board had rejected the offer, prompting Wings to publicly solicit members of the much smaller credit union to convince them to petition the Continental board in favor of the merger.
NCUA also is seeking to write regulations on a broader range of potential transactions, including the merger of a credit union into a non-credit union. The proposal comes as the agency and state regulators in Massachusetts are reviewing the merger of Northeast Community CU into nearby Haverhill Bank.
The federal regulator is seeking to clarify rules for voting in these types of transactions. Among the issues being probed are: members' rights to request a recount; whether management should be allowed to obtain interim vote counts during the balloting; whether credit union employees should be able to solicit votes on behalf of management's stance; and whether employees should be able to handle ballots.
