CUNA Comment Letter

Proposed Revisions to the Corporate FCU Bylaws

February 25, 2003

Ms. Becky Baker
Secretary of the Board
National Credit Union Administration
1775 Duke Street
Alexandria, Virginia 22314-3428

Dear Ms. Baker:

The Credit Union National Association (CUNA) appreciates this opportunity to comment on the proposal to update and clarify the Corporate Federal Credit Union Bylaws (Bylaws). Corporate federal credit unions (corporates) are “strongly encouraged” to adopt the revised Bylaws when finalized but are not required to do so and may continue to follow currently approved Bylaws or adopt only portions of the revised Bylaws. CUNA represents over 90% of our nation’s more than 10,100 state and federal credit unions.

CUNA commends the agency’s move to modernize the current Bylaws, which were last formally updated in 1983. As indicated in the Supplementary Information section of the proposal, significant regulatory, economic and institutional changes for corporates that have taken place over the past 20 years compel this modernization of the Bylaws. CUNA strongly supports the comment letter on this proposal filed by the Association of Corporate Credit Unions (ACCU). In particular, we would like to address and reinforce ACCU’s position on several key issues, which are discussed below.

CUNA applauds the amendments to the Bylaws that provide for electronic delivery of communications between a corporate and its member credit unions. In particular, we believe the changes that allow for electronic elections, notices and conferences will enhance the efficiency of the operations of corporates and, in turn, benefit their membership. Credit unions will be able to pass on these benefits/savings to their members.

CUNA supports the amendment of Article III, Section 4 of the Bylaws to state that a member of a corporate may remain a member of that corporate until the person or entity withdraws or is expelled. Currently, the Section requires members of corporates to be terminated that are no longer within the field of membership (FOM) on the day the bylaw was effective or thereafter. This update brings the Bylaws in line with NCUA’s FOM policy allowing federal corporate credit unions to apply for national FOMs. This change further enables credit unions to have needed flexibility in determining how long they wish to remain a member of a particular corporate. We also support the provisions in Article III permitting a corporate to restrict services to a member no longer in the FOM and addressing the termination of membership in the case of a member of a corporate converting to another form of financial institution.

CUNA also supports the provisions in Article V of the Bylaws that relax both member requirements for calling a special meeting (Section 3) and quorum requirements (Section 4). By making its easier for a member of a corporate (especially a smaller corporate) to require the corporate to call and hold a special meeting, these provisions will provide member credit unions with greater opportunity to provide input into decisions on special matters as they arise.

CUNA opposes the proposed revision in Article IV of the Bylaws (Section 1) that would eliminate the alternative of paying for a share in a corporate in installments and instead require the purchase of a share to be made at the time of subscription. CUNA urges the agency to retain the current Bylaw provision giving credit unions the option to pay for corporate shares either in installments or at the time of subscription.

In conclusion, CUNA does not believe the costs of credit unions to retain membership in corporates will increase as a result of the proposed changes. Instead, these proposed amendments should allow for greater technological and operational efficiencies for corporates, which ultimately will benefit credit unions and their members.

Thank you for the opportunity to share our comments. If you have any further questions, please contact Mary Dunn (mdunn@cuna.com) or Catherine Orr (corr@cuna.com) at our e-mail addresses or at (202) 638-5777.

Sincerely,


Mary Mitchell Dunn
Associate General Counsel


Catherine Orr
Senior Regulatory Counsel