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NAFCU Regulatory Affairs Counsel James Akin wrote to the NCUA Friday in response to its proposed rule to make changes to member expulsion procedures bylaws of federal credit unions (FCUs), which implements changes made by the NAFCU-sought Credit Union Governance Modernization Act (CUGMA).

The proposal would develop a policy through which an FCU member may be expelled “for cause” by a two-thirds vote of a quorum of the FCU’s board of directors.

In the letter, Akin calls on the agency to adopt a realistic member expulsion policy that “avoids overly burdensome requirements, provides clear guidelines, and prioritizes the safety and welfare of credit union staff and boards of directors.”

Specifically, Akin recommends the NCUA should:

• avoid including requirements in the final rule that are not found in the CUGMA, such as the right for a member to appeal their expulsion;
• provide clarity around the notice requirements and equitably distribute the burden of ensuring receipt of the notice and request for hearing; and
• allow the option for in-person, virtual, or on-the-papers hearings, at the discretion of a credit union’s board of directors.

“NAFCU urges the Board to recognize the difficult position that credit unions face in the absence of a functional member expulsion policy and issue a final rule that is flexible and easy to use,” wrote Akin.

NAFCU is supportive of a rule that more closely reflects the language of CUGMA and seeks to ensure that the final rule is cognizant of the varied nature of credit unions and avoids a one-size-fits-all approach to member expulsion. Of note, the association sent members a Regulatory Alert breaking down the proposal and soliciting credit union feedback.

Read the full letter and stay tuned to NAFCU Today for updates as the NCUA moves through the rulemaking process.