WASHINGTON -
Johnson told attendees to NAFCU's annual Congressional Caucus she expects the NCUA Board to vote a final rule expanding access to credit union books and records to members in the coming weeks, a proposal that has drawn scorn from credit union executives. The NCUA chairman said the rule, and two others expanding disclosures on mergers and setting by law enforcement powers for the agency, are aimed at opening the management and governance process to rank-and-file members. "We will continue to look at what's in the members best interests," said Johnson.
The transparency initiatives proposed by NCUA have drawn broad condemnation from credit union executives, many of who worry they will invite meddling and interference in credit union operations and governance.
While NCUA has trailed the other regulators in seeking greater transparency from credit unions, a series of controversial member revolts to stop credit unions from converting to savings banks has prompted the federal regulator to act.
The NCUA proposals that have attracted criticism would set clear standards on when members could access records of internal deliberations-such as those over a switch to a bank. NCUA has also proposed disclosures on executive compensation-so-called golden parachutes-during credit union mergers; and enforcement powers over credit union bylaws, which NCUA believes have been manipulated in several fights over conversions to banks.
Johnson, whose six-year NCUA term officially expired last month but who is expected to stay on, has apparently set the transparency issue as part of her legacy at NCUA. She told the NAFCU conferees she thinks it is vitally important to provide rank-and-file credit union members with as much information as possible to generate participation in the governance of their credit unions. "We continue to look at what is in the best interests of the members," she said. "I fully believe that it's in the members' best interests to give them as much information as possible."
NCUA has reviewed the comments on the member access rule and is discussing possible changes to the proposal, said Johnson.
The federal regulator also took the opportunity to address the reemergence of private deposit insurance, which all but disappeared after the 1991 crisis in Rhode Island. Johnson, referring to the reemergence of private insurance in two states, Texas and Washington, said the private product will always be inferior to the government's deposit insurance because it lacks the full faith and credit of the federal government, like the one operated by NCUA.
The private insurance issue has emerged in recent months, with NAFCU opposing the move to reintroduce private insurance in Washington, saying that it could create risks for the entire credit union industry, just as the Rhode Island crisis did.
Since the 1991 failure of Rhode Island's private insurer, the Rhode Island Share and Indemnity Corp., a half dozen other private insurers have terminated their business as numerous state legislatures have mandated federal deposit insurance for all of their depository institutions. The only survivor of what was once a network of two dozen state insurers as ASI of Dublin, Ohio. The company provides deposit insurance for about 300 state chartered credit unions in more than a dozen states (federal charters are required to have federal insurance through the National CU Share Insurance Fund).
About 100 of the privately insured credit unions are in Puerto Rico.
