The Savings and Community Bankers of America blasted the National Credit Union Administration's plans to block conversions by credit unions to thrifts.
The proposed rule, issued in June, is nothing more than an attempt by the agency to protect its turf, a letter from the thrift trade group charged.
"In response to this potential exodus of its regulated population, NCUA now proposes to adopt a 'captive industry' approach and increase the barriers to exiting the NCUA system," the letter said.
The proposal also contradicts NCUA's trend of increasing credit union powers, according to the Savings and Community Bankers.
"Just at the time that credit unions wish to take perhaps the ultimate competitive step and become full-fledged, tax-paying members of the financial services community, the NCUA objects," the letter said. "Such regulatory actions are transparently self-serving."
The thrift trade group's comment letter was one of only 18 the agency received in response to a 30-day comment period, which expired Aug. 1.
Attorneys who have discussed conversion with credit unions also have said the agency merely wants to protect its turf.
Under the proposal, a credit union seeking to convert to a thrift needs a vote of its members which would be monitored by the agency and approval from the NCUA board. On the whole, the comment letters supported NCUA's decision to closely monitor conversions.
Although the NCUA should closely monitor the transactions, converting to stock could be a good move for some credit unions and their customers, wrote Andrew Binford, senior vice president of Andrews Federal Credit Union.