NCUA To Tighten ConversionRules
ALEXANDRIA, Va. - (01/07/05) -- The NCUA Board is expected next weekto toughen voting rules governing conversions to mutual savingsbank by requiring that ballots be secret and be counted by anindependent third party, among other things. The proposal, comingon the heels of the biggest conversion yet--of 1.7 billionCommunity CU-- will also require expanded disclosures to includehow the conversion will affect members' voting rights and ownershiprights, how much the conversion will cost, and whether managementplans to sell the institution to the public through a stockoffering in the future. The initiative was prompted by thediscovery by NCUA of voting improprieties during the 2003 failedconversion by Columbia CU, after which NCUA discovered theemployees/members may have been intimidated by management intovoting for the conversion, and that senior members of managementcounted some of the ballots behind closed doors. The NCUA Board isalso expected to approve changes to the rules covering conversionsto private deposit insurance which will also require secret ballotsand an independent count of the ballots.