This could become a new reality, if a proposed NCUA rule becomes finalized.
The NCUA Board is proposing that credit union officials and employees cannot be indemnified against liability based on an aggravated breach of the duty of care when such breach may affect fundamental member rights and financial interests. NCUA defines that matters affecting the fundamental rights and interest of federal credit union (FCU) members include charter and share insurance conversions and terminations.
NCUA states throughout its proposed rule that a change in charter or insurance status may significantly impact the members’ financial interest. NCUA insinuates that credit union officials and management are putting their personal financial interest ahead of the members’ financial interest when they consider such choices.
Therefore, any attempt by credit union officials and employees to exit the NCUSIF could be construed as a breach of their fiduciary responsibilities and as a result, they could be held liable, if a court determines they engaged in gross negligence, recklessness, or willful misconduct.
It seems that this is meant to be another weapon in NCUA’s arsenal to bully any credit union from seeking to change its charter or insurance status. This threat of personal liability is just a continuation of NCUA's campaign to effectively make federal credit unions a prisoner of the NCUSIF.
As Maya Angelou wrote in I Know Why the Caged Bird Sings,
“The free bird thinks of another breeze
and the trade winds soft through the sighing trees
and the fat worms waiting on a dawn-bright lawn
and he names the sky his own.
But a caged bird stands on the grave of dreams
his shadow shouts on a nightmare scream
his wings are clipped and his feet are tied
so he opens his throat to sing.”
So, will federal credit unions stand on the grave of dreams or name the sky as their own?
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