Shadowy Group Sues NCUA Over CU Conversions Rule

ALEXANDRIA, Va. – A group purporting to represent credit unions filed suit in federal court here yesterday challenging NCUA’s new rules on the conversion to mutual savings bank. The self-styled Coalition for CU Charter Options has fought NCUA efforts to regulate conversions for at least three years and is represented in its suit by long-time thrift lobbyist Jim Butera, and is headed by Lee Bettis, former CEO of AGE FCU, which he helped convert to a thrift. Butera also represents the American Bankers Association, and he helped craft the proposal to ease credit union conversions to thrifts, which failed in the last Congress. Despite claims to represent credit unions, the group has yet to divulge any names of its credit union supporters or contributors, even in the court documents. “I can’t tell you who the credit unions are. There are many credit unions who are members of the coalition, and many credit unions who have contributed to the Coalition,” Bettis told The Credit Union Journal yesterday. “I can assure you, there are many, many credit unions.” The suit said NCUA violates provisions of the Federal CU Act which require it to adopt substantial regulations on conversions to other charter types required by other federal regulators. But NCUA’s 20 pages are substantially more stringent than the one-page guidelines posted by the Office of Thrift Supervision, for example, according to the suit. The group charges that NCUA’s motive in amending the rules three times in the last two years is to thwart conversions of credit unions. NCUA Chairman JoAnn Johnson responded to the suit by saying the conversion rules were aimed at protecting consumers/members of credit unions and she is confident they will stand up to the legal challenge. The new rule, adopted in December, requires the credit union to facilitate communications among members and expands members' access to information used to pursue a conversion, among other things.