A rule aimed at enhancing transparency of mergers between federal credit unions – but that could be applied to mergers between federally insured, state chartered credit unions — was proposed today for a 60-day comment period by the NCUA Board, among other things.
As the agency noted in its overview of the proposal, the rule would amend the “procedures and timeframes that a federal credit union (FCU) must follow for voluntary mergers with another credit union.” In particular, staff noted during the meeting, the proposal addresses concerns of the agency that “merger packets” presented to members in advance of merger decisions are not “serving members’ needs.” The proposal is also aimed, staff said, at clarifying contents and format of the member notice of the merger “so that members of merging federal credit unions have better information about the merger transaction.
Further, the proposal would require merging FCUs to disclose all merger-related compensation for certain employees and officials of the merging FCU.
NCUA Board Acting Chairman J. Mark McWatters expanded on all of those points, noting that the proposal pushes credit unions to “tell the story” about why a merger is being proposed.
Board Member Rick Metsger said that the proposal is “important to me; (credit union) management has a responsibility to tell members a merger is being proposed,” noting that “full transparency” is necessary.
Metsger also said that, during the comment period, he hoped that stakeholders would weigh in on whether federally insured, state chartered credit unions should be included under the proposal (rather than only FCUs).
“I’m prepared to entertain requests to not pre-empt state laws or rules if they provide substantially similar, or stronger, disclosures and communication opportunities for the members of federally-insured state chartered credit unions,” Metsger added.
NASCUS President and CEO Lucy Ito, following the board meeting, said that while some state supervisors may share NCUA’s concerns over transparency and member interests, states may also view this as a credit union governance issue and business decision as opposed to an insurance matter.
“Under this view, application of merger rules should properly be left to state supervisors to decide as the chartering agency of state-chartered credit unions,” she said. “This view, among others, will be reflected in our comments.”
In other action, the NCUA Board today:
- Issued a proposed rule to set up procedures for appeals directly to the NCUA board of agency regulations that now have their own embedded appeals provisions; a comment period of 60 days was set.
- Issued a proposed rule to codify the process for appealing material supervisory determinations to the NCUA Supervisory Review Committee – with the aim of being more consistent with the practices now used by federal banking agencies; the proposal was issued for a 60-day comment period.
- Heard a first quarter 2017 report of the Temporary Corporate Credit Union Stabilization Fund (TCCUSF), which showed the fund with net income of $43.8 million in the first quarter, and total assets of $1.58 billion (up from $1.53 billion at YE’16).