NCUA Shoots Down Conversion Bid ByLafayette FCU
ALEXANDRIA, Va. - (07/21/06) -- NCUA rejected an application byLafayette FCU to convert to a mutual savings bank based onincomplete and potentially erroneous disclosures. In a letter sentJuly 12 to Washington attorney Richard Garabedian, who isengineering the conversion of the $380 million suburban Washington,D.C., credit union, Edward Dupcak, director of NCUA's mid-AtlanticRegion Two, said the packet submitted on the conversion falls shortof the regulatory requirements in a variety of ways. He notes thecredit union proposes to allow members to vote by proxy, which isprohibited by the Federal CU Act; that the packet does not includea plan of conversion or identify a way to obtain one; that it doesnot support the credit union's claims for a need to expand itscustomer base; that the disclosures suggest that once Lafayettegets a refund of its 1% NCUSIF deposit it will invest it, when morelikely it will need those funds to obtain deposit insurance fromthe FDIC; that, despite its claims, at 9%, Lafayette is not indanger of falling below regulatory capital requirements. Inaddition, Lafayette makes claims that deposit and savings rateswon't change, which is impossible to project.