ALEXANDRIA, Va. – The NCUA Board rejected a plea from the organizers of the new Members United Corporate FCU to appoint a director of the Illinois credit union league as chairman of the board of directors of the new corporate, to be known as Alloya Corporate FCU.
In a closed meeting, the NCUA Board decided the appointment would violate the agency’s own interlocks rule, which bars the chairman of a corporate board from serving simultaneously as an officer, director, or employee of a credit union trade association. “Given recent history,” said NCUA in its ruling, “corporates must be zealous in establishing that their management is not subject to undue influence, whether from a credit union league or any other organization.”
NCUA said with more than 2,000 member credit unions, the new corporate should have ample candidates to fill the chairman’s role. “The [NCUA] Board is confident that individuals may be drawn from that universe who can capably serve this new institution, without any hint of conflicting loyalty or undue influence.”
“Finally, the [NCUA] Board notes that the corporate credit union sector has just come through the most significant crisis in its history,” said NCUA. “Failures of the country’s largest corporates during 2009 and 2010, including Members United Corporate Federal Credit Union, caused billion in losses and very nearly caused the ruin of the entire credit union industry. Against that backdrop, the [NCUA] Board is simply not persuaded that waiver of a fundamental provision in its corporate rule, designed to preserve and protect the independence of the industry, is warranted at this time.”
