CUNA and NAFCU have filed an amicus brief with the court in support of NCUA as part of the lawsuit filed against the agency by a Texas credit union seeking to convert to a mutual savings bank charter.
The $1.4-billion Community Credit Union, Plano, filed suit against NCUA after it refused to certify a vote by membership in favor of the charter conversions. In declining to approve the charter change, which had been approved by the state regulator, NCUA said the disclosures provided to members in the mail as part of the balloting process were not proper because in the mailing the documents arguing in favor of the conversion were placed in front of the required disclosures.
NCUA has similarly declined to approve a conversion attempt by the $1.2-billion OmniAmerican Credit Union in Fort Worth, Texas, as well, and that credit union said it will also intervene in the Community CU case.
In their brief, CUNA and NAFCU first outlined the nature of credit unions and the attributes of membership, keying on two points:
* The four disclosures to members NCUA requires of a credit union attempting to convert to a bank "are within the scope of NCUA's congressional mandate to administer votes on charter conversions and those disclosures are not inconsistent with rules of other financial regulators."
* "The required disclosures are accurate and essential to credit union members deciding whether to approve a proposed conversion."
NCUA requires that four disclosures be made to members prior to voting. Those disclosures concern: ownership and control, credit unions' tax-exempt status and its effect on rates and services; subsequent conversion to stock institutions, and the cost of the conversion.
In the brief, the two national trade associations suggest that the four disclosures are permissible and appropriate under the Federal Credit Union Act, and that they are neither inaccurate nor misleading, as claimed by the credit union. "To the contrary, they are fair in content and essential to assuring that credit union members can vote on an informed basis," the groups told the U.S. District Court for the Eastern District of Texas.
