NCUA Votes To Begin Enforcing FCU Bylaws
ALEXANDRIA, Va.-Frustrated over the lack of judicial enforcement of CU bylaws, the NCUA Board voted last week for a new regulation that will give the federal regulator enforcement power over federal credit union bylaws.
The new rule was prompted by several instances in which the courts refused to enforce CU bylaws enabling members to petition for a special meeting to recall directors who had sought to convert their credit unions to mutual savings banks.
The new rule will allow NCUA to use administrative remedies, such as cease-and-desist orders, or in more severe case, removal of the board, to enforce violations of bylaws.
NCUA was previously authorized to enforce bylaws but gave up the power in the 1980s during an overall de-regulatory move.
As part of the new rule, NCUA also clarified the issue of board succession, allowing the supervisory committee to temporarily act as a board of directors if an entire board is recalled by a vote of the membership, as was proposed in the DFCU case. In that case, the DFCU board refused to call a special meeting to vote on the board recall, claiming there was no legal succession provided for under NCUA rules and regulations.
Texas Commission Bars Hostile CU Takeovers
AUSTIN, Texas-The Texas CU Commission has adopted new rules governing mergers at its Oct. 19 meeting, including a prohibition of any financial offer to members to encourage them to vote for a merger, in effect, barring any hostile takeover. The prohibition was prompted by last spring's hostile takeover attempt by Wings Financial FCU, which offered members of Continental FCU $200 each if they voted for a merger. The new rules will bar any promise by a credit union to pay to the members of another credit union a sum of money or other material benefit upon the successful completion of a merger of the two credit unions.
