Texas Closer To Changing Rules On Conversions
The Texas Credit Union Commission moved one step closer to changing the state's credit union-to-bank conversion rules to ensure greater opportunities for members to have input in the process before voting begins.
At its February meeting, the Texas Credit Union Commission voted to issue the proposed rules change for a 30-day comment period after considering the recommendations of its Legislative Advisory Committee.
While the proposals address conversions from federal CU charters to state CU charters as well as conversions from state charters to federal charters, the "big issue" surrounds the portion of the proposals directed at credit union-to-bank conversions.
"The biggest change is that the proposal would require the board of directors to give notification to credit union members they are contemplating a conversion prior to taking a final vote," Feeney told The Credit Union Journal. "It also requires that the board make information about the conversion available electronically and allow members to submit written comment on it."
Under current rules, a credit union board need only send out printed disclosure materials at the same time it sends out the ballots. That was one of the issues that came up when Community CU and OmniAmerican CU, both in Texas, converted to bank charters.
Because discussion of the conversion was barred at Community CU's annual meeting (which took place weeks before the special meeting of the membership where the final vote tally occurred), and because more than 20,000 ballots had already been sent in by the time the board allowed for discussion of the conversion at the special meeting, members opposed to the conversion said they had no opportunity for any meaningful comment or input into the process.
The proposed rules change, Feeney said, is to allow for greater communication between the board and CU members before the disclosures and ballots are sent out to members.
The proposed rules are expected to be officially out for 30-day comment on or by March 10. After the comment period is over, the Legislative Advisory Committee will review any comments filed and offer recommendations to the Texas Credit Union Commission. The commission will take up those recommendations at its meeting in June.