FTC Aiming for Fall for CU Private Insurance Disclosure Proposal

WASHINGTON – The Federal Trade Commission team working on drafting a proposal for a regulation requiring privately insured credit unions to disclose the fact they do not carry federal insurance hopes to have a proposed regulation out this fall. According to FTC Staff Attorney in the Division of Enforcement Neil Blickman, who is on the team assigned to drafting the reg, they have already gathered background from American Share Insurance, the only remaining private insurer of credit unions. The FTC team is also working in consultation with NCUA, the Federal Deposit Insurance Corporation, and NASCUS. “I’m hopeful we’ll have something published in the fall,” Blickman said. There is no statutory deadline, he added. The FTC’s drafting team is comprised of members of the Office of General Counsel and Division of Financial Practices, whom Blickman said have some background knowledge of credit unions. Blickman said he could not say how the FTC plans to enforce the regulation after it becomes final. The original disclosure requirement was included in the Federal Deposit Insurance Corporation Improvement Act of 1991. The FTC was charged with enforcing this provision but Congress had refused to appropriate any funds to the commission to enforce it; even though it was law, no one was making sure it was followed. After a General Accounting Office study came out last year stating that more than one-third of 57 randomly sampled privately insured credit unions were not in compliance, Congress decided to allow FTC to enforce the law in the omnibus appropriations bill for fiscal year 2004. FDICIA section 151 requires privately insured credit unions to have written on receipts, doors, windows, counter stands and other places the fact that they are not insured by the government.