Oct. 4, 2012 – NAFCU is pleased NCUA has concluded it has the authority to approve charter conversions to facilitate subsequent mergers, something the association has long advocated for.
The agency’s decision on the matter was outlined in a Letter to Federal Credit Unions (12-1007) written by NCUA General Counsel Michael McKenna. In the letter, McKenna points out that the Federal Credit Union Access Act, as amended by the Credit Union Membership Access Act of 1998, and subsequent court rulings “support NCUA’s discretion” to approve such activities.
Following passage of the CUMAA, a District Court ruled that the law’s mandate to encourage separate credit unions likely applied only to the “expansions” of existing credit unions affected by the addition of a single group and not to mergers of multiple common-bond credit unions consisting of many groups, McKenna noted. The District Court’s ruling on this issue was subsequently upheld by the Court of Appeals.
McKenna pointed out that the FCUA not only grants NCUA the authority to approve credit union charters and subsequent conversions of those charters, it provides the agency with the authority to approve the voluntary merger of credit unions. “Taken together, these statutory provisions provide the authority to NCUA to permit charter conversions to facilitate subsequent mergers,” he wrote.
NAFCU General Counsel and Vice President of Regulatory Affairs Carrie Hunt said that the decision is one that NAFCU members “have been clamoring for.” She added that “any measure of relief that assists credit unions in effectuating their goals is one that NAFCU wholeheartedly supports.”