ALEXANDRIA, Va. - (011/4/05) -- Fueled by growing size of creditunion conversions to banks, The NCUA Board approved new rulesThursday requiring broader disclosures to members prior to voting.The new rules will require that potential converts tell theirmembers whether the conversion plans include the eventual sale ofthe institution in a stock offering; how much the conversionprocess is expected to cost; and the effects the switch will haveon the ownership and voting rights of the current members/owners,and also require that votes by conducted and counted by independentthird-parties. The main impetus for the new rules was thecontroversy surrounding the failed conversion of Columbia CU lastyear when NCUA invalidated the successful conversion vote afterdiscovering widespread irregularities amidst allegations ofvote-rigging. Among other things, the federal regulator found theballots had been counted by credit union employees behind closeddoors. "NCUA believes it is of paramount importance for creditunion members to be fully informed about the conversion so they maycast educated and meaningful votes," said NCUA Chairman JoAnnJohnson. The new rules come just weeks after the $1 billion LakeMichigan CU failed to obtain the necessary member vote which wouldhave made it the largest credit union to convert to a bank. Sincethen, Community CU, at $1.7 billion in assets the nation's largestcommunity charter, has applied to convert to a mutual savings bankand sell stock to the public.
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The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
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The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
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The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
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The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
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Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
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Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.
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