WASHINGTON -
CUNA President Dan Mica said NCUA ought to expand its current merger guidelines to cover instances like this where one credit union pursues a merger outside of board negotiations. "We're trying to avoid a Wild West situation, where the bigger guns wins; until a bigger gun comes along," said Mica. "We hope this could be done without Congress' involvement," said Mica, who met last week with NAFCU President Fred Becker and representatives of the National Cooperative Business Association and Consumer Federation of America to discuss the unusual credit union fight.
"We probably need some rules of the road to define the procedures and ground rules for this sort of deal," said Becker. "This is a very serious activity that has the potential to effect the movement as a whole."
"These are cooperatives, I think that makes a difference," said Becker, acknowledging that hostile takeovers occur in the corporate world on a regular basis.
The parties agreed that the hostile takeover attempt by Wings Financial has very little precedent in the cooperative world.
More recently, the Farm Credit System fended off a hostile takeover attempt.
But lawyers representing Wings Financial with Washington powerhouse lawfirm Venable LLP, insisted that NCUA rules, which require board approval from all partners in a merger, already bar hostile takeovers. Wings is being represented by long-time credit union figures Bill Donovan, the former lobbyist for NAFCU, now a Venable partner, and Bruce Jolly, once counsel for CUNA.
The two and Wings Financial's CEP Paul Parish met earlier this month with NCUA Board members at the agency's Alexandria, Va., offices to discuss their proposal.
NCUA said the agency is watching the situation closely and has procedures in place to address the matter. "We want to make sure people know there are already procedures in place to protect the members," said John McKechnie, director of public and congressional affairs at NCUA. "The board has the right to say no. But also they should have to explain why they think this is not in the members' best interests."
The bottom line, he said, is that no deal can take place without the consent of the Continental board. "Any merger proposal between credit unions A and B has to have the consent of credit union A and credit union B. The directors of bother credit unions have to approve it," said McKechnie.
