The banking lobby and its allies were assailing NCUA's new rules on conversions to banks, even before the ink was dry-making it likely the provisions will be challenged in court. "For the third time in three years, NCUA has imposed additional regulatory burdens on credit unions that seek to become mutual savings banks.
This rule does a disservice to their members and undermines the clear intent of Congress," Edward Yingling, head of the American Bankers Association, stated minutes after the NCUA Board voted the rule.
Robert Freedman, a Washington lawyer who has engineered most of the 35 credit union conversions, said he thought the purpose of the new rules is to "chill" growing enthusiasm among some credit unions to switch to bank charters.
"They want people to be so afraid to do it," Freedman told The Credit Union Journal.
The rules will require credit unions to notify members before the board votes to convert; facilitate communication among members; provide access to books and records to members questioning a conversion; shorten the balloting to 30 days from the current 90 days; and require new boxed, or standard disclosures, stating that credit unions generally provide better rates on loans and savings than banks.
