NCUA Proposes More Member Access

ALEXANDRIA, Va. -- NCUA, which has been slow to embrace the move to more corporate transparency embodied in the Sarbanes-Oxley Act, moved yesterday to pry open the internal records of credit unions to their members. Two rules proposed yesterday would require credit unions to disclose the compensation paid to management in mergers; and give members greater access to credit union books, records and minutes to board and committee meetings. The proposals come as the internal proceedings of credit unions are coming under increasing fire; during conversions to mutual savings banks, or the current hostile takeover battle between two airline credit unions. Congress has also raised the issue of transparency among credit unions. And a study issued last year by the General Accountability Office, the chief auditor for Congress, recommended that credit unions make more information generally available on executive compensation, just as publicly owned corporations are being required to do. Until now, NCUA has been slow to respond, saying that increased corporate disclosures required by Sarbanes-Oxley are generally aimed at curbing management abuses seldom seen at credit unions. But recent cases where credit union boards and management have expended significant resources--sometimes hundreds of thousands of dollars paid by the credit union--to fight off member challenges; at Columbia CU, DFCU Financial CU and Lafayette FCU, have spurred NCUA to act. In the member access rule, all federally chartered credit unions would be required to make all non-confidential records, books and minutes available to members for legitimate purposes, such as reviewing a charter conversion or merger. The second proposal would require all credit unions during a merger to submit information to NCUA as part of the merger application detailing any compensation to be earned by top management as a result of the combination.