ALEXANDRIA, Va. – ASI Inc., the last surviving private deposit insurer for credit unions, worried that NCUA voting proposals on conversions to private insurance and to mutual savings banks lumps insurance converts with the much-reviled switches to banks.
In a comment letter submitted to NCUA, ASI President Dennis Adams said proposals that would require an independent third-party overseer of insurance conversion ballots would be costly and time-consuming, and suggested that a prohibition on the credit union’s interim tally of votes unfairly associates conversions to private insurance with recent abuses uncovered in the votes to convert to mutual savings banks.
“Unfortunately,” wrote Adams, whose firm insures about 170 state chartered credit unions in nine states, “NCUA has drawn its conclusions regarding interim vote reporting abuses based on concerns raised in credit union-to- bank charter conversions, not share insurance conversions.” Of the 40 conversions ASI has had since 1992, Adams said he is not aware of any converting credit union that has used interim voting tallies to reach out to potential “yes” votes, as occurred in several conversions to banks. “Furthermore,” he noted, “access to individual member voting decisions is already prohibited by rule, and no further constraints are needed.”
“Based on our years of experience,” wrote Adams, “this guilt by association is not supportable by facts and limiting the sharing of voting results during the voting period forces converting credit unions to incur significant additional costs to assure they achieve the requisite minimum participation in the vote, or 20% of the membership. Credit union-to-bank conversions, on the other hand, have no such 20%, making their process much easier, and correspondingly their need to know who has voted and how they have voted more critical to their voting outcome.”
Adams said NCUA changes to the rules on insurance conversions in 2005 already increased the cost of such ballots from $3 per member to about $4 per member. The current proposal would raise that again to about $5 per member, he estimated. For a credit union of $100 million the extra cost would amount to between $15,000 and $30,000.
Consequently, Adams requested that NCUA withdraw the provisions on the retention of a third-party to oversee the voting and the prohibition of interim tallies.
