NCUA to Wield Stick in Enforcing FCU Bylaws

ALEXANDRIA, Va. -- NCUA proposed new regulations yesterday that would return the federal credit union regulator to the business of enforcing bylaw disputes. The proposal, prompted by recent incidents at would-be credit union converts to banks where members petitioned to recall the board of directors, would allow NCUA to enforce a federal credit union's bylaws by issuing administrative orders, such as cease and desist or prohibitions. The proposal comes as members of Lafayette FCU, angered over the $330 million credit union's ill-fated conversion to mutual savings bank, are fighting to enforce a credit union bylaw that requires 750 members sign a petition asking for a special meeting to recall the board for its failed conversion. The credit union has disqualified more than 200 names on a petition that includes 820 signatures and organizers of the petition drive are threatening to go to court to get the bylaw enforced. In this and similar cases in recent years NCUA has ruled it will not intervene in bylaw disputes unless it involves the safety and soundness of the credit union. NCUA Chairman JoAnn Johnson, who recommended the enforcement of bylaws, said she believes it is important for credit union members to know there is an enforcement mechanism. "The issue is members want the bylaws to mean something and that there will be someone who will enforce them," said Johnson.