Both CUNA and NASCUS have sent comment letters to NCUA objecting to its proposal on private deposit insurance.
"The proposal would require NCUA's prior approval for the inclusion of information about private insurance in mailings to members before a membership vote on conversion to private insurance," noted Juri Valdov, CUNA vice chairman and Governmental Affairs Committee chairman. "Additionally, the proposal does not provide for an appeals or review process if there is a dispute between NCUA and the credit union about such information."
"CUNA supports the option for state governments to decide for themselves whether to permit their credit unions to operate with private share insurance," continued Valdov. "We are concerned that questions have arisen regarding the role of state regulators under the proposal and its uncertain impact on the dual chartering system for credit unions."
CUNA said that it supports full and fair disclosures regarding private insurance to be provided to members in a timely manner. It also suggested the proposal does not provide for a review process if there is a disagreement between NCUA and a credit union regarding the accuracy of the content of additional disclosures, the trade group said.
The proposal would require the use of an independent third party to administer the member vote. "The proposal leaves unclear the role of the credit union's board, supervisory committee or other internal credit union body, which would otherwise have overseen the vote," said Valdov.
In its comment letter, NASCUS similarly objected to NCUA's proposed part 708b.
"The debate about federal and non-federal primary share insurance has been long running and often divisive. While reasonable minds can draw differing conclusions on the merits of various share insurance providers, one fact is irrefutable: Congress, in establishing explicit guidelines for a member vote to terminate federal share insurance, allowed to stand the long recognized authority of state legislatures to authorize non-federal insurance," said NASCUS in its letter. "Consequently, 23 state legislatures have provided for the possibility of non-federal share insurance and nine states currently allow their credit unions to seek non-federal share insurance. NCUA's proposed Part 708b would practically, if not explicitly, prohibit by regulation that which Congress and 23 state legislatures have allowed for by law."
