ACB: Press Releases

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release July 12, 2005 #05-43
E-mail: [email protected]

ACB STRONGLY SUPPORTS CREDIT UNION CHOICE ACT

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WASHINGTON, D.C. — America’s Community Bankers said today that it strongly supports a bill introduced in the House to prohibit the National Credit Union Administration from using regulatory tactics aimed at preventing credit unions from converting to a mutual savings bank or savings association charter.

ACB endorsed H.R. 3206, the Credit Union Charter Choice Act of 2005, introduced by Reps. Patrick McHenry (R-N.C.) and Rep. Edolphus Towns (D-N.Y.). ACB has launched a nationwide outreach program to bankers, urging them to ask their members of Congress to support the legislation.

“When a rogue regulator tramples on the rights of credit union members to choose their charter, it threatens the strength and diversity of our financial system,” said Diane Casey-Landry, ACB’s president and CEO. “Credit unions that have recently converted or attempted to convert to a mutual savings institution report that uncertainty in the conversion process and unnecessary restraints on communication with credit union members, the public and the media are the largest impediments to conversion,” she added.

Federal law permits a credit union to convert to a mutual savings bank or savings association charter if its members vote to do so, and requires conversions to be “subject to regulation that is no more or less restrictive than that applicable to charter conversions by other financial institutions.”

“The NCUA has imposed a number of restrictions on how a converting credit union must communicate with its members,” Casey-Landry said. “Because the NCUA arbitrarily dictates the content of information that must be presented to credit union members before the conversion vote, credit unions are prevented from freely communicating with their own members and the public,” she added.

Failure to adhere strictly to the required NCUA procedures, even when the mandated disclosures are one-sided and biased, has led the NCUA to overturn conversion votes. The latest invalidation occurred on July 11, when the NCUA invalidated a 71 percent affirmative vote by members of the Community Credit Union, Plano, Texas, to convert to a mutual savings bank charter. The Office of Thrift Supervision and the Texas Credit Union Department verified the vote. But the NCUA invalidated the vote based on how a sheet of paper with the agency’s required boxed disclosures was folded.

OTS said in certifying the vote that “there is no reason to object to the credit union’s addition of the information set forth on the reverse side of the boxed disclosures because the additional information mitigates potentially misleading statements included in the NCUA’s required disclosures.”

The legislation would allow the NCUA to continue to oversee conversions, but would add certainty to the process, reduce unnecessary costs and allow credit unions to communicate freely and accurately about the conversion with their members, the public and the media.

Specifically, the bill would prohibit the NCUA from requiring a converting credit union to include information in the conversion materials that speculates on the future operations of the resulting institution, information or statements that are inaccurate or distort the impact on of the conversion credit union members, and information that conflicts with the regulations of other regulators, including the Office of Thrift Supervision.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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