www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/ Hello, this is Samantha Shares. This episode covers The American Bankers Association Trade group’s letter to N C U A Board Chairman Todd Harper on N C U A’s on the agencies improved transparency. This letter demonstrates the challenges of N C U A’s recent public comments that are negative towards credit unions. The letter uses these references to attack N C U A and credit unions. The following is an audio version of that letter. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A. And now the letter. October 15, 2024 The Honorable Todd. Harper ChairmanNational Credit Union Administration Dear Chairman Harper:The American Bankers Association (A B A) commends the National Credit Union Administration (N C U A) for its renewed focus on credit union transparency. As credit unions grow and become more complex, proper disclosure of pertinent information to credit union member-owners and the public gains importance. In addition to recent reporting changes for credit unions with more than $1 billion in assets regarding fee practices,1 a new proposal on executive compensation transparency for federal credit unions will provide greater accountability within the credit union system. With the White House Office of Management and Budget indicating that the N C U A may issue a Notice of Proposed Rulemaking as soon as this month,2 we urge the N C U A to implement additional transparency requirements relating to the increasingly complex andconcerning activities of some credit unions, namely merger transactions involving banks. Specifically, we urge the N C U A to require such credit unions to receive membership approval, disclose financial terms, anddemonstrate how combinations with banks might impact consumers, communities, and taxpayers. In 2007, the N C U A organized an Outreach Task Force in response to inquiries from Congress3 – and a subsequent report by the Government Accountability Office4 – on credit unions. Among other topics, the Task Force examined N C U A policies and procedures on senior executive compensation. Although state-charteredcredit unions disclose compensation data for key employees through IRS Form 990 like most other nonprofit organizations, federal credit unions are exempt from doing so given their status as federal instrumentalities. In its 2008 report to the N C U A Board, the Task Force concluded that disclosure of senior executive compensation would be “consistent with prevalent public policy and should enhance accountability to the [credit union]members,” and align with “federal credit unions’ member-owned, demoC R Atically-controlled status.”5 Due to their cooperative structure, credit unions afford their members “the right to vote on strategic federal credit union decisions including the directors, mergers, and conversions.”6 Because the results of such votes can directly affect senior executive compensation, the “Task Force concluded members should know or have access to senior executive officer compensation information when deliberating on how to cast their vote.”7 | | | Given the importance of merger transactions in the life of an organization, transparency about the possible personal incentives of management related to the transaction is especially important.While mergers between credit unions and the acquisitions of credit unions by banks require membership votes, the acquisitions of banks by credit unions do not.8 In December 2023, the N C U A’s Director of the Office of Examination and Insurance stated in a memorandum to you that “a credit union's purchase of a bank is typically a strategic action to expand its geographic footprint or to grow a loan program.”9 Thememorandum noted that the N C U A approved 64 bank transactions with credit unions between 2011 and September 30, 2023, “a small portion of the overall consolidation occurring in the financial servicesmarketplace.”10 However, credit union acquisitions of banks now represent a much larger share of total transactions.According to an October 3, 2024 report from the American Banker, “about 90 bank sales were announcedthrough September,” and “credit union buyers were involved in nearly a fifth of the deals to date this year.”11 The 18 deals announced so far in 2024 have already eclipsed the record 16 set in 2022, and total bank assets targeted by credit unions so far this year – more than ...
