Johnson: NCUA Mutual Conversion Disclosure Reg Good for Members

WASHINGTON-In her speech to CUNA’s Governmental Affairs Conference, NCUA Vice Chair JoAnn Johnson touted the agency’s final rule from the most recent board meeting on member disclosures in thrift conversions. She outlined the major changes to the disclosures, including the fact that member voting rights may be diminished following a conversion from a credit union to a mutual and the potential for their ownership to be lost. Additionally, members will be informed of any possible economic benefits to credit unions officials if the institution converts to a stock-held charter. Johnson added that she has proposed the agency look into additional changes regarding the integrity of the voting process among other things. “I strongly believe that leaders of credit unions-as member-owned financial cooperatives-have an ethical and fiduciary responsibility to be straight-forward, open and transparent with all decisions affecting its membership, charter, and structure,” Johnson stated. Just after NCUA’s final rule was approved, America’s Community Bankers referred to it as a “Berlin Wall around credit unions.” “One must ask, `what is the NCUA afraid of?” ACB President Diane Casey-Landry said in a statement. “Are credit union members not capable of making decisions in the best interest of the institution, the members and the community?’ We think they are. “ACB believes that all financial institutions, including credit unions, should have the ability to determine what charter best fits the institution’s business plan and meets the needs of the local community.” ACB also quoted a few credit unions’ comment letters that were opposed to the regulation, including Three Rivers Federal Credit Union, Max Federal Credit Union, Security Service Federal Credit Union, and Clark Bounty School Employees Credit Union. Casey-Landry said NCUA’s efforts to look further into the voting process are aimed “to further restrict conversions.” “The NCUA should take a lesson from the former Soviet Union,” Casey-Landry concluded. “It should be eliminating obstacles to economic freedom, not erecting artificial barriers simply to protect their empire.” Johnson went on to discuss the importance of financial education and her role on the newly formed Financial Literacy and Education Commission. The vice chair explained that the personal savings rate across the nation dropped 2% last year. At the same time bankruptcies are increasing particularly among young adults. She commended CUNA for their work with the National Endowment for Financial Education. “Promoting the financial education of our underserved strengthens our society as a whole,” Johnson said. “I especially encourage low-income designated credit unions to consider developing financial education programs, accessing the technical assistance grants NCUA has available for such efforts. Knowledge and communication of financial services through financial education will give members the power to make choices in their lives to strengthen themselves, their families, and their communities.” Johnson also issued a challenge for credit unions to look ahead for themselves as well as their members. She emphasized the importance of vision and succession plans. “Vision is that ingredient which expands thinking, reaches for new and innovative ways to reach out to members, and plans for the inevitable and the unforeseen,” Johnson said. “Vision is the addition of services to meet the changing financial needs of your members, whether they are delivered via the Internet or over the counter It is the development of a succession plan for changing credit union leadership, be it planned or unexpected. Your credit union is where it is today, because of someone’s vision.” [email protected]