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CUNA Regulatory Comment Call

April 15, 2008

EXECUTIVE SUMMARY

• The National Credit Union Administration (NCUA) Board has issued a proposed Interpretive Ruling and Policy Statement (IRPS) regarding provisions in the Federal Credit Union Act (Act) that prohibit persons convicted of certain criminal offenses from participating in the affairs of the credit union.
• Absent prior written consent from the NCUA Board, the Act prohibits persons convicted of a criminal offense involving dishonesty or breach of trust, or who have entered into a pretrial diversion or similar program, from participating in the affairs of the credit union. The proposed IRPS will exclude certain minor offenses, juvenile offenses, and expunged convictions, while also prohibiting NCUA from providing consent to those individuals who have engaged in certain other criminal offenses.
• The Federal Deposit Insurance Act contains similar prohibitions and both the Federal Deposit Insurance Corporation (FDIC) and the Office of Thrift Supervision have issued guidance in this area. The proposed IRPS is modeled after the guidance issued by the FDIC.
• The proposed IRPS establishes the procedures that credit unions must follow if they are seeking the required NCUA consent. Under these procedures, the credit union must explain the circumstances surrounding the conviction or pretrial diversion program and demonstrate that the individual is fit to participate in the affairs of the credit union without posing a safety and soundness risk or impairing the public confidence in the credit union.
• The proposed IRPS places the burden on the credit union to prove that the NCUA Board should grant the requested consent. The IRPS also sets forth the factors that the NCUA Board will consider when reviewing these requests, which includes the nature of the offense, evidence of rehabilitation, the position that the individual held at the credit union and the nature of those responsibilities, the ability of the credit union to supervise the individual, the credit union's fidelity bond coverage, the position of the state regulator if the credit union is state-chartered, and any other factors that may be relevant.
• If the NCUA Board denies consent, the credit union may appeal this decision within thirty days.
• Comments in response to the proposed IRPS are due by June 3, 2008. Please submit your comments to CUNA by May 22, 2008.

Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Senior Vice President and Deputy General Counsel Mary Dunn at mdunn@cuna.com and to Senior Assistant General Counsel Jeffrey Bloch at jbloch@cuna.com; or mail them to Mary and Jeff in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, DC 20004-2601. You may also contact us at 800-356-9655, ext. 6032, if you would like a copy of the IRPS. You may also access it on the Internet at the following address: here.

• Should this guidance be in the form of an IRPS or would a regulation be more appropriate?
  
  

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• The application for seeking the NCUA Board's consent is unstructured under the IRPS. Should there be a more formalized application, using a form similar to the form used by the FDIC in these matters?
  
  

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• Other comments?
  
  

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