SALT LAKE CITY – Mutual bank conversions may be unnerving to a majority of credit unions with "greed" a motivating force behind some mutual savings bank conversions and yet the NCUA remains even handed in reviewing conversion bids, according to Region 5 Director Melinda Love. In remarks to the annual meeting of the Utah League of Credit Unions, the NCUA's top Western region supervisor said there are both positive and negative elements in conversion proposals though the monetary gains to be reaped by officers and boards can be substantial. The leadership of these CUs end up paying themselves handsome salaries while "the millions in dividends paid by the members over the years as capital would be siphoned off," she argued. She said that while the NCUA may be "reviled and tagged" for self interest in its approach to conversions, the agency has sought to be fair and even handed considering that members "do have the right to choose" the structure they want. That philosophy fits the basic CU tenet of "one member-one vote," she said. Still a good example of CU members finding the conversion plan distasteful and eventually thwarting it occurred last year at Columbia Community CU in Vancouver, Wash., she recalled. "The members did not find it in their best interest" to move ahead with a new structure, said the NCUA official who is based in Tempe, Ariz. but whose regional offices supervise CUs across 14 Western states. The fact is, she said, many CU members faced with conversion proposals really do not understand or realize "the power in their hands" to decide structure. Love, a featured opening day speaker at the League conference, made her comments during a question and answer session after her talk in which a Utah CEO asked for her reaction to the two Texas conversion bids in the works from two Dallas/Fort Worth CUs. Her speech to the Utah CEOs focused mostly on agency exam policies with a reference to a new "culture" among examiners to stay closer to industry trends and new product offerings and to push risk management instead of "risk avoidance" with CUs. In stressing the agency would be paying closer attention to violations of the Bank Secrecy Act, she disclosed that she is already "closing down" a CU in the region that experienced "a large embezzlement" after failing to comply with audit rules on cash accounts. She gave no further details of the agency action but warned that CUs which ignore rules on having a Bank Secrecy policy within a specified time frame do so at their peril. The Region 5 director also discussed how examiners are focusing on how well CUs approach and aggressively manage risk in portfolios. And she said examiners would remain tough on those CUs which create risk targets and then "blow right through them" without explanation for why they ignored thresholds. Nonetheless, Love urged CUs not to fear calling supervisors if they feel unfairly treated, warning the agency would come down hard on examiners who engage in what she called "retaliatory" action against a CU which complains. Love observed that CUs in the Western states continue to be leaders in introducing new products and services which is why examiners in her region have to be so alert to the latest trends on the more risky products like subprime loans and indirects. "The credit union innovations start in the West and move East," she observed noting the growing high volume of business and participation loans in Region 5. She also dismissed as "so much hooey" the cries about the dangers of the "super or mega" credit union "and size morphing." Love decried the "level playing field" complaint that is raised at supervisors because "I believe there is no such thing as a level playing field." It is simply a matter of perspective and competition, she concluded. [email protected]