WASHINGTON (10/2/13)--The Credit Union National Association is a strong supporter of minority credit unions and backs the National Credit Union Administration's work to implement a program that would help preserve those institutions. However, as with any agency initiative, an analysis should be completed of different elements of a program to assure benefits outweigh costs, CUNA said.
"We applaud the objectives of any program that encourages credit union membership, including initiatives that further the interests of minority credit unions and their members, which are an important facet of the credit union system," writes Mary Dunn, CUNA deputy general counsel and senior vice president, in a Sept. 30 comment letter to the agency.
The NCUA proposed an interpretive ruling and policy statement (IRPS 13-1) in July to establish a Minority Depository Institution (MDI) Program under requirements of the Dodd-Frank Act.
The program is reflective of ones established in 1989 under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) for the Federal Deposit Insurance Corp. and the now-defunct Office of Thrift Supervision, in response to the failure of the Federal Savings and Loan Insurance Corp.
Under the 2010 Dodd-Frank Act, FIRREA was applied to the NCUA, the Office of the Comptroller of the Currency and the Federal Reserve Board.
The Dodd-Frank provisions require the NCUA to consider how such goals as the preservation of the present number of minority credit unions and their minority character in cases involving mergers or acquisitions can be accomplished. They also direct the NCUA to: consider how to provide technical assistance to prevent insolvency of minority credit unions that are not currently insolvent; provide for the creation of new minority credit unions; and provide for training, technical assistance and educational programs.
Under the agency's proposal, 50% of the membership and 50% of the management of the credit union would have to meet the definition of "minority." (Credit unions that have 50% of their directors who meet the definition would also qualify.)
"While the 50% of membership requirement is statutory, the requirement to have 50% of the management be minority is not. We question whether this additional, non-statutory requirement is necessary and whether it will actually undermine the achievement of the statute's objectives in some cases," Dunn writes.
"We also think there should be some flexibility for minority institutions that fall below the 50% levels but have plans in place to reach those benchmarks again through marketing, employment recruitment, etc.," the CUNA letter added.
Use the resource link to read the CUNA comment letter.