WASHINGTON (12/14/10)—The Credit Union National Association (CUNA) is asking credit unions to weigh in on a recent National Credit Union Administration (NCUA) plan under which natural person credit unions would be prohibited from maintaining membership in more than one corporate at any time. The proposal allows a limited exception of multiple memberships during a brief period when a credit union transitions to a new corporate. The proposed restriction would only apply prospectively, and, therefore, would not prohibit a natural person credit union from maintaining membership in multiple corporates if the relationships existed prior to the effective date of a final rule. Among other things, the proposal would:
* Prohibit a natural person credit union from making any new investment—including a share or deposit account, loan, or capital investment—in a corporate of which the natural person credit union is not a member; *Allow corporates to charge their members reasonable one-time or periodic membership fees; *Require corporate credit unions to maintain a record of all board of director votes, including how each director voted; and * Incorporate certain sound audit, reporting, and audit committee practices from existing non-credit union guidance, such as the Federal Deposit Insurance Corporation regulations.
The pending proposal was approved for comment at the NCUA November board meeting and it follows a much more extensive final corporate credit union rule adopted by the agency in September. CUNA is seeking comment on a number of specific issues, including the following:
* NCUA issued the proposed rule to address certain issues that the September corporate rule did not cover. Do you agree with the timing of the proposed rule, or would it be preferable to allow more time between the September corporate rule and any follow-up rule to allow the industry and NCUA to better understand the impact and effectiveness of the changes made by the September corporate rule? * The proposal would limit a natural person credit union to membership in only one corporate at a time to reduce “rate shopping” among the corporates. Do you support such an approach? Do you agree with NCUA that “rate shopping” by natural person credit unions is negative, in the sense that it led to excessive risk-taking by the corporates? Can you suggest an alternative approach to address the risky behavior of some corporates? * The proposal would require corporate CUSOs to provide the corporate’s auditor, board of directors, and NCUA complete access to the corporate’s books and other documents that the auditor, directors, or NCUA deem pertinent. Do you support this proposed provision? Why or why not?
The NCUA is accepting public comments until Jan. 28, 2011. However, CUNA is seeking credit union remarks by Jan. 14.