A recent American Banker article, "NCUA Rules Blamed for Credit Union’s Failed Conversion," contains incomplete and inaccurate information.
In particular, the article quotes two sources saying the National Credit Union Administration somehow prevented credit union leadership from communicating "effectively and in [an] open manner" with its membership about a proposed conversion to a mutual thrift, a proposition defeated by a margin of more than 3 to 1.
NCUA has two primary responsibilities in supervising conversion votes. First, we ensure that communications with members are accurate and not misleading. Second, we ensure that the methods and procedures of the voting process are fair and legal.
The story provides a perfect example of the type of misinformation we take exception to in communications to members. It says, "There are concerns about the viability of the NCUA's Share Insurance Fund" followed by a quote from Alan Theriault, the president of CU Financial Services (a firm that advises credit unions on charter conversions) that "[t]here is a clear advantage to being a part of the Federal Deposit Insurance Corp.'s Deposit Insurance Fund." These statements are inaccurate and misleading.
The truth is that NCUA's Share Insurance Fund is fully capitalized at $11.6 billion, backed by the full faith and credit of the U.S. government, and its equity ratio is currently at the statutorily authorized level of 1.30 percent of federally insured deposits. Additionally, the Share Insurance Fund has assessed no premiums since 2010.
It is neither the intent nor the practice of NCUA to influence a vote on a credit union conversion. That decision is for the members to make. NCUA rules, protecting members' rights to make well informed decisions, are not a "minefield," as Theriault puts it, but rather protect members from a possible "minefield" of misinformation.
David M. Marquis is the executive director of the National Credit Union Administration.
Editor's note: American Banker believes it was accurate in reporting Alan Theirault's concerns about the NCUA's Share Insurance Fund and on his view that there are advantages to FDIC coverage.