Will NCUA's new fiduciary responsibility rule mean that federal credit unions will have to make public enforcement orders to the credit unions' membership?
As readers of this blog know, I have derided the NCUA about not making public all enforcement actions, such as Letters of Understanding and Agreement and other consent orders.
However, the new standards of fiduciary duty for federal credit union directors adopted by NCUA Board on December 16 may result in these enforcement actions being made public by federal credit unions.
The final rule will require directors to act in the best interests of credit union members, particularly in connection with matters affecting the fundamental rights of members.
In my estimation, regulatory enforcement orders are material events that affect the fundamental rights of credit union members and therefore, should be disclosed. Members have the right to know whether management and the board have engaged in unsafe and unsound banking practices or have violated the law.
Not disclosing this information could be viewed as a breach of the directors' fiduciary duty.
Now, if only we could get NCUA to practice what it preaches. If NCUA really believes that part of its job is to protect the interest of credit union members, shouldn't the agency publish all enforcement actions?
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NCUA is not the SEC, and need not have the same standards. Get over it. And if you truly want to protect credit union members, get a new job--rather than take pay to attempt to materially disrupt the CU sector. You will have a much happier New Year.
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