The National Credit Union Administration has accused a Chicago-based law firm of misrepresenting the government's policy regarding the conversion of credit unions to thrift charters.
An advertisement sent to some Illinois credit unions in May by Schiff Hardin & Waite "very clearly makes it seem we have approved one of these transactions, when that is not the case," said Robert M. Fenner, NCUA general counsel.
In response, the agency is expected to send a letter to federally insured credit unions in Illinois explaining the agency's position.
"We'll tell them both what we think is wrong with the letter and what we think about the whole effort of lawyers trying to get credit unions to convert - that it's motivated by lawyers who are out to make money," Mr. Fenner said.
The agency had a problem with language in the four-page advertisement. The beginning read: "The Office of Thrift Supervision and the National Credit Union Administration recently issued legal opinions approving the conversion of a mutually owned credit union to stock form."
Mr. Fenner said the agency's legal opinion described only the procedure for such a transaction. It hasn't approved any conversions.
Gary Mowder, a partner at the firm, said the agency's position was not misrepresented. The advertisement noted the opinions were responses to inquiries for interpretive advice, and a footnote said no transaction had been completed.
The law firm has prepared a letter addressing the agency's concerns.
Mr. Mowder said the firm sent it to NCUA officials and is awaiting their reaction.
"As a courtesy to the agency, we'd be more than happy to make their points to the credit unions we contacted," he said.
On June 23 the NCUA board will consider regulations to give it final approval over a charter conversion by any federally insured credit union.