NCUA and mergers: Keeping members out of the room where it happens

In the past month, the NCUA has approved two different mergers to take place. While this may seem like nothing new or exciting, both merger approvals noticeably took place without a vote from the credit unions’ membership, meaning that the credit unions’ member-owners had no say whatsoever in the mergers.

A perplexing revelation

Given that I have only been in the industry for about five years, there are many aspects of credit unions—particularly regarding NCUA policy and rules—that I’m still discovering. Nonetheless, my reaction upon reading this news was something akin to King George III’s reaction to learning George Washington was stepping down in the musical Hamilton, when he said, “Is that true? I wasn’t aware that was something a person could do. I’m…perplexed.”

Perplexed or not, it turns out this very much is something a person (or, in this case, the NCUA) can do.

According to section 708b.105 “Approval of merger proposal by the NCUA” listed in the NCUA Rules and Regulations, “For mergers of federal credit unions into federally insured credit unions, if the NCUA determines that the merging credit union is in danger of insolvency and that the proposed merger would reduce the risk or avoid a threatened loss to the NCUSIF, the NCUA may permit the merger to become effective without an affirmative vote of the membership of the merging credit union otherwise required by 708b.106 of this part.”


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