The National Credit Union Administration is expected Nov. 10 to water down its proposal for ending shared management between the industry's liquidity centers and trade groups.
In an interview Tuesday, NCUA Chairman Norman E. D'Amours said the final proposal will be changed to take into consideration concerns raised by the industry during several months of heated debate.
"We are going to be reconsidering many provisions in the proposed regulations," Mr. D'Amours said, without elaborating.
Still, sources are not expecting the agency to back off its plan to end the domination some leagues exert over corporates.
But no one expects NCUA to go as far as the proposal it issued in September.
For example, it's expected that the agency will stick to its plan forbidding members of a league board to make up the majority of a corporate board.
But a widely criticized provision that barred, for purposes of reaching a majority, a credit union official from serving on a corporate board if someone else from the institution served on a league board might be dropped.
Also, the November proposal probably will be clearer about what "credit union-related organizations" cannot have interlocks with corporates.
Approving any regulation at all could draw a lawsuit from the Credit Union National Association. Earlier this month the trade group voted to sue the agency if the final rule was "substantially similar" to the proposal.
Several comment letters charged that the proposal was illegal.
"NCUA does not have the authority to mandate how corporate credit union members govern themselves," charged a letter from Berenbaum, Weinshenk & Eason. a Denver firm hired by System United Corporate Federal Credit Union, Arvada, Colo. "NCUA takes this step in an unlawful mannet, without adequate factual support, or rational justification."
The overwhelming majority of the roughly 250 letters the agency received by the Oct. 24 comment deadline said the proposal exceeds the agency's authority, tramples over state's rights, and violates the industry's democratic structure.
"Isn't this the approach Hitler took?" wrote Don D. Stivers, president of Oil Capital Federal Credit Union, Tulsa. Okla. "He was right and everyone else was wrong. Doesn't this sound son of like the former USSR's approach to running businesses?"
The National Association of State Credit Union Supervisors said NCUA's role as insurer doesn't give it the right to dictate the governance of the state-chartered corporates.
"Congress has not granted the NCUA the power to regulate state-chartered credit unions and the NCUA has no congressional mandate to alter fundamental credit union principles for statechartered credit unions," wroteDoug Duerr, the group's president.
The agency did have some supporters, including the National Association of Federal Credit Unions.
"All corporate credit unions, including U.S. Central, should be stand-alone institutions, independent of leagues and trade associations." wrote NAFCU president Kenneth Robinson.