Tuesday, April 8, 2014

NCUA Can Immediately Take Action on Charter Choice and Disclosure

ABA submitted a Statement for the Record for an April 8, 2014 hearing before the House Financial Services Committee.

While the majority of ABA's Statement for the Record addresses a number of regulatory issues ranging from bank examinations to the new mortgage rules, it also focused on two issues that the National Credit Union Administration could immediately address -- charter choice and disclosure.

On the issue of charter choice, ABA wrote:

Many credit unions today have determined to mirror everything a bank does and the National Credit Union Administration (NCUA) seems anxious to accommodate those desires rather than protecting the expansion of the credit union subsidy paid by taxpayers and ensuring it is appropriately directed. If credit unions want to act like banks, there should be a simple, fair and workable path to convert to a mutual bank charter—a process that NCUA has thwarted at every turn. The process must be straightforward and predictable, without NCUA’s patronizing proposition that credit union members do not understand their ownership rights and interests in a conversion—and if they did, would never vote for a conversion. This is NCUA protecting its turf and not protecting taxpayers.

With regard to transparency, ABA wrote:

Most tax-exempt organizations, including universities and hospitals, must disclose the compensation of senior officials to the Internal Revenue Service in the Form 990—a form that has become an important tool for determining the transparency and accountability of tax-exempt organizations. By publicly disclosing this information, the Form 990 fosters good corporate governance as it attempts to ensure that the tax expenditure is being appropriately employed.

Federal credit unions should be required to file Form 990 information return or its equivalent just like state-chartered credit unions and most other tax-exempt institutions. These are actions that can and should be done by NCUA today. Expanding the public’s opportunities to review executive salaries would promote improved corporate governance and greater credit union accountability. It would inform Congress, taxpayers, and credit union members about whether this valuable tax subsidy is going towards the credit union mission or is subsidizing credit union management.

Read the full Statement for the Record.

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