An Appealing Proposition

May 26, 2017 at 9:42 am Leave a comment

The NCUA board unveiled proposed regulations yesterday which, taken as a whole, would create a more formal and uniform appellate process by which credit unions could appeal regulator determinations. Although these changes may not seem all that important, they are actually much needed reforms that are long overdue. Another proposal would mandate that members have more information before voting on voluntary mergers.

Here is why you should care:

First in the interest of full disclosure, as I started reading through these proposals last night after turning on game 7 of the Stanley Cup playoffs, I fell asleep faster than an old man in a nursing home after taking his evening meds. As a result, I will be describing these in more detail in the coming weeks as I seek credit union feedback. But for this morning there is one specific aspect of the proposal that I want to highlight.

As pointed out by NCUA, The Federal Credit Union Act does not provide any specific right to a hearing on the record in connection with chartering and field of membership determinations. NCUA is proposing a move to create a formalized appeals process to be codified in a new and improved Sub-Part B to Part 746.

Under the new framework, if the Office of Consumer Protection and Access denies a FOM, Merger, or Spin Off, there would now be a formal process for both written determinations and appeal of these determinations; this includes the right to make oral presentations to the NCUA board.

This approach has several advantages over NCUA’s existing approach to making chartering and FOM determinations. First, as I have commented in previous blogs the more discretion NCUA gives credit unions to argue for FOM expansions, the more important it becomes for NCUA to demonstrate that it has a rational systematic basis for evaluating these requests. Second, a well-functioning appellate process takes the emotion out of disputes and provides a way for parties to know that they are being treated fairly. Finally, a body of administrative case law would provide a needed source of additional guidance for both credit unions an examiners.

On that note, enjoy the long weekend. Hopefully we can squeeze in a sunny day or two.


Entry filed under: General.

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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