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Chairman Johnson testifies on conversion issues

Johnson stresses disclosure and member rights are paramount before the House Subcommittee on Financial Institutions and Consumer Credit

Washington, D.C., May 11, 2006 – National Credit Union Administration Chairman JoAnn Johnson today testified before the House Subcommittee on Financial Institutions and Consumer Credit on the Credit Union Charter Choice Act and credit union conversions.

Chairman Johnson thanked Subcommittee Chairman Bachus and Members for the opportunity to present the Agency’s views on credit union conversions to mutual savings banks and associations, and she noted there are fundamental issues at stake. Credit unions are nonprofit cooperatives that exist to promote thrift and provide a source of affordable credit for their members rather than to maximize profits to outside investors or stockholders.

“A credit union is owned and governed by its members, and it is the member-owners, not NCUA or any other group, who should decide the future of their credit union,” Chairman JoAnn Johnson said. “NCUA fully supports the right of credit union members to decide the business model that is most appropriate and beneficial to them, and whether a charter conversion serves their best interest.”

NCUA’s primary mission is to ensure the safety and soundness of federally insured credit unions, and the Federal Credit Union Act requires NCUA administer the member vote on a proposed conversion and review the methods and procedures of the vote.

“Congress has recognized the important role played by NCUA in administering the conversion vote, an important part of which is ensuring that plain-English, prominent disclosures are made. Real consumer protection is dependent on complete and accurate information. Once that is provided, it should be up to the members of a credit union to decide whether to convert,” Chairman Johnson said.  She noted that NCUA supports provisions of H.R. 3026, the Credit Union Charter Choice Act that would require a secret ballot and an independent inspection of elections, as well as retain the 90, 60, and 30 day mailing requirement.

“NCUA believes its primary role in this matter is to ensure that members receive complete, accurate, and timely disclosures regarding conversion,” the Chairman said,   pointing out the agency is currently considering changes to clarify and improve its conversion rule because “it is imperative that the voting process be transparent and fair.”

The complete text of the testimony is available online at http://www.ncua.gov/news/speeches/speeches.html.

The National Credit Union Administration is the independent federal agency that charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates the National Credit Union Share Insurance Fund (NCUSIF), insuring the savings of nearly 85 million account holders in all federal credit unions and majority of state-chartered credit unions. NCUA is funded by credit unions, not tax dollars.