NCUA's Slow Action On CU's 'Hostile Takeover' Was Proper, Says Chair

LAS VEGAS - The apparent inaction by NCUA during the credit union movement's first hostile takeover attempt earlier this year actually was an example of it performing proper due-diligence, according to NCUA Chairman JoAnn Johnson.

"I know we were criticized early on for not throwing out a quick statement," Johnson said. "NCUA has a lot of latitude and must consider members' best interests. It does not want to put out a hastily drawn up rule it will regret in six months."

Johnson illustrated her point with a story about a cat's owners who believed the animal had become incontinent and was urinating in the kitchen each night. After several instances, they took it to the vet to be put to sleep. The next morning, however, there once again was a puddle next to the refrigerator - the ice maker was leaking, not the cat.

Luckily, she added, the vet had spared the animal's life out of sympathy. The cat was returned to its relieved and chagrined owners.

"It is very important to do all due diligence and not make a hasty decision just for the sake of making a decision," Johnson declared. "With all the rules we have in place, it is not necessary to act hastily."

Johnson was a keynote speaker at CUNA's recent America's Credit Union Conference here. She said the hostile takeover issue has been a "good education process." For a merger to take place, she noted, both boards of directors and NCUA must approve it. For FCUs, a vote of both memberships is required. For state-chartered credit unions, the necessity of a member vote depends on state rules.

Although she does not usually title her presentations, Johnson told the audience the name of the 1985 time travel movie, "Back to the Future," was appropriate. "There are lots of challenges facing credit unions right now. But as I've said in the past, challenges are opportunities," she said.

According to Johnson, CUs need a simple slogan similar to the famous Bill Clinton one-liner, "It's the economy, stupid." She suggested: "It's all about the members."

"Credit unions should go back to their roots. They should go back to basics, back to the members, and remember members are the owners."

Credit unions are part of the solution, not part of the problem, when it comes to issues facing the financial services industry, according to Johnson.

She added that Congress is considering regulations for credit card disclosures and disclosure of material raises for management due to credit union mergers.