CUNA Comment Letter

Prior Notice for Change in Executive for New or Troubled Credit Unions

August 30, 2004

Ms. Mary Rupp
Secretary to the Board
National Credit Union Administration
1775 Duke Street
Alexandria, VA 22314-3428

The Credit Union National Association (CUNA) appreciates the opportunity to comment on the National Credit Union Administration’s proposal regarding requirements for a new or troubled credit union to provide notice to the agency before such a credit union makes a change in senior level personnel. CUNA, the largest national trade association serving credit unions, represents approximately 90 percent of the nation’s 9,400 state and federal credit unions. CUNA’s letter was developed under the auspices of our Examination and Supervision Subcommittee.

Summary of CUNA’s Position


The Federal Credit Union Act and NCUA’s regulations require newly chartered and troubled credit unions to seek NCUA approval before the appointment, employment, termination or redeployment of directors and senior management officials. NCUA rules clarify how a credit union may obtain NCUA’s prior approval of a change in management.

The proposal would extend the time period before a management candidate or director could begin service at a credit union. Under the current rule, a proposed director, committee member or senior executive officer may serve temporarily until the credit union and the individual are notified in writing of NCUA’s approval or disapproval.

The proposal would preclude such a candidate from beginning service until after the notice period has ended – which would be thirty days plus any additional time that NCUA may require.

In our view, the current language allowing a candidate for a director or senior management position to serve, while the credit union seeks approval of the managerial change, is preferable and more beneficial to the credit union than the proposal. Also, continuing the current provisions would not raise safety and soundness concerns as the individual would be discontinued if NCUA disapproves of his or her involvement with a credit union.

Given the difficulties a number of credit union indicate they face in filling senior position at a credit union, CUNA recommends NCUA not change the current language that allows an individual to serve while being reviewed by NCUA. We believe the current procedures provide adequate safeguards for the credit union and the agency. The current rule requires a credit union to file a notice that contains information about the competence, experience, character, or integrity of the individual on whose behalf the notice is submitted are adequate safeguards. In order to compile this information a credit union must complete a thorough investigation ensuring that any candidate is qualified to attain the senior position.

CUNA recommends the current language be retained, even if it creates an inconsistency with the rules for other affected financial institutions. Because many credit unions are smaller financial institutions with fewer layers of management, longer vacancies within such credit unions would have a greater adverse impact on them.


CUNA recommends the agency maintain the current provision that minimizes the vacancy period for crucial senior level positions. If you have any questions, please contact me at (202) 638-5777.


Catherine A. Orr
CUNA Senior Regulatory Counsel