ALEXANDRIA, Va.-Placing a credit union into conservatorship is a very serious decision to make and not one that the NCUA Board has ever taken lightly. According to NCUA Associate General Counsel Allan Meltzer, the reasons in the Federal Credit Union Act for conserving a credit union are "very broad." "There haven't been that many conservatorships. There are probably as many reasons as there have been conservatorships," Meltzer said. The agency averages only a few per year, he said. The first reason for conservatorship in the FCUA, which is the one most commonly used, is to protect the members, conserve the assets, or protect the insurance fund. While most fit in this category, it is very generic and oftentimes, the specific reason for putting a credit union in conservatorship is confidential. Other reasons include consent by credit union officials, criminal acts, violation of a cease and desist order, concealment of books, and two others added in 1998 with the Credit Union Membership Access Act concerning Prompt Corrective Action. When a field examiner feels a credit union is a likely candidate for conservatorship, the recommendation travels up the chain of command, eventually landing in the NCUA Board's lap. Meltzer said he did not recall the board ever turning down a recommendation, but couldn't say definitively that it had never occurred. When the board does vote to place a credit union into conservatorship, "The intent usually is to be able to fix the problem and return it to the members." he said. "History shows we've done that in a significant number of cases." But that is not always possible. In those instances, the credit union is either liquidated or merged with another credit union. The statute does not provide for a specific length of time for resolution. "This is a significant power and I think the board takes it very seriously," Meltzer concluded. [email protected]
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