Latest deregulation proposal would ease credit unions’ path to convert to mutual savings bank

Credit unions would have an easier path to convert to mutual savings banks (MSBs), and other changes, under the latest round of deregulation proposed by their federal regulator Tuesday.

The National Credit Union Administration (NCUA), in what it said is its fifth round of deregulation proposals since late last year, said its proposal to deregulate conversion of credit unions to MSBs would “reduce regulatory burden and increase flexibility by eliminating some procedural, disclosure, and communications requirements for converting insured credit unions to mutual saving banks.”

The agency asserted that the proposal would simplify compliance for conversion disclosures and offer credit unions flexibility to craft disclosures that are “effective and clear for their members.”

The proposal on disclosure conversions to MSBs is one of three released by the agency. NCUA termed the conversion disclosure requirements “overly burdensome” and only guidance (which the agency has vowed to make less effective).

The other two proposals would:

• Eliminate “prescriptive requirements” associated with disclosures credit unions must make when they merge with other credit unions and terminate federal share insurance coverage and convert to private insurance. The agency said the “core disclosure and notification requirements” would be retained when credit union members vote on the decision. NCUA said the change would remove “overly burdensome requirements” and give credit unions “flexibility in designing effective communications.”
• Rescind an interpretive ruling and policy statement (IRPS) on low income designations and community charters because the agency’s field of membership (FOM) requirements are in its chartering manual. NCUA called the IRPS “obsolete,” and claimed it would “ease the compliance burden on federal credit unions by limiting the number of sources they must check to ensure compliance with applicable community chartering and FOM requirements.”

Comments on the proposals are due 60 days after publication in the Federal Register.

NCUA Announces Fifth Round of Deregulation Proposals