Steven Bisker, an attorney in Alexandria, Va., and former assistant legal counsel for NCUA, explained that the agency had formally included credit union bylaws, by reference, in its own regulations as a point of law. That meant that violating a credit union's bylaws meant, in effect, also violating an NCUA regulation. While this gave the agency a great deal of power to oversee different bylaw disputes, Bisker said it also embroiled the agency in an “administrative nightmare.”

One set of problems was procedural in nature. Since the agency had included the bylaws by reference in its regulations, the laws governing federal regulations would seem to require NCUA to publish them for public comment in the Federal Register. Then there were questions about what to do with bylaw amendments that credit unions adopted themselves and the agency approved. Should those also be included in federal regulation and, if so, should they also be put out for public comment?

Another potential set of problems arose from the approach that potentially would involve NCUA not only in very big and serious bylaw problems, but also relatively small and unimportant ones, and this was deemed to be a waste of both agency and credit union resources. So, the agency decided to deregulate CU bylaws.

But when it did so, the agency did not foresee that there might come a time when the leadership of credit unions around the country might adapt courses of action that, in effect, ignored the CU's bylaws.

“I think there is a recognition on the part of the agency that there are some things, such as election procedures, procedures for special meetings, and the like which need to be addressed by the agency and not by courts as the first recourse,” said Eric Richard, CUNA general counsel. Court decisions take too long and are almost always unpredictable, sometimes failing to speak to the real issues that need to be addressed,” Richard explained.

In addition, there have been disputes, for example in the DFCU case, about which courts would necessarily have jurisdiction in a bylaw fight between a credit union's leaders and some of its members.

Should the agency decide to incorporate some credit union bylaws into its regulations, Bisker and Richard agree that it would likely only be some of them and the first challenge the agency will face may be deciding which ones to include. Bylaws governing credit union elections, the removal of board members and the calling of special meetings would seem to the obvious ones, but bylaws discussing the roles and responsibilities of credit union supervisory committees might be included as well.

Carrie Hunt, NAFCU senior counsel, stressed that the agency would face a fine line between being seen as too much of a regulator on the one hand and not doing enough to protect credit union members' rights on the other.

It is also unclear how far NCUA's increased bylaw authority might reach. As the regulator for federally chartered credit unions, NCUA's authority would seem pretty straightforward when it comes to FCU's, but it's unclear that the agency would have any authority to regulate state chartered credit union bylaws, particularly those chartered by states that mandate bylaws or bylaw amendments for their credit unions, Richard noted.

Interestingly, according to Bisker, should the NCUA decide to incorporate some federal credit union bylaws into its regulations, it may actually move more into parity with its most similar federal financial regulator, the Office of Thrift Supervision, which also has some provision for enforcing some institutional bylaws, Bisker said. Calls to the agency for an explanation of the precise status of thrift bylaws in its regulations were not returned in time for deadline. –[email protected]