October 1, 2004
By E-mail regcomments@ncus.gov
Ms. Becky Baker
Secretary of the Board
National Credit Union Administration
1775 Duke Street
Arlington, Virginia 22314-3428
Re: Proposed rule to update 12 CFR Part 708a, Conversion of Insured Credit Unions to Mutual Savings Banks
Dear Ms. Baker:
This letter is in response to the National Credit Union Administration's (NCUA) request for comments on its proposal to amend 12 CFR Part 708a of the NCUA's Rules and Regulations. The Massachusetts Division of Banks (Division) is the primary regulator of 105 state-chartered credit unions holding total combined assets in excess of $10 billion. The Division also supervises nearly 200 state-chartered banks with total combined assets in excess of $175 billion. The Division welcomes this opportunity to comment in support of the NCUA's proposed rule governing additional disclosures and expanded voting procedures for insured credit unions converting to mutual savings banks.
The Division endorses the concept of providing members with the most information possible to ensure that they are able to make educated decisions relative to their credit union. This is the Division's position for the voting body of any Massachusetts chartered financial institution considering a chartering conversion. The Division remains concerned that the member of a credit union fully understands the ramifications of a conversion to a mutual savings bank, particularly how such a conversion will impact their existing ownership and voting rights as credit union members. Previously, on December 1, 2003, the Division voiced its support for amendment to the NCUA's Rules and Regulations 12 CFR Part 708a, which required supplemental disclosure requirements to credit union members regarding conversion of insured credit unions to mutual savings banks. Additionally, the Division suggested that the regulation be amended further to include additional disclosures from the Board and senior management regarding economic benefits for senior officials and future conversion to a stock institution. The Division is pleased to see that this new proposed rule includes a provision requiring a converting credit union to supply its membership with a standardized disclosure form that addresses the effects of conversion to a stock institution and costs associated with the conversion to mutual savings bank, as well as ownership and control of the institution and the potential effects on rates and services to the membership. Also, the standardization of such disclosures will facilitate the NCUA's determination relative to a potentially converting credit union's adherence with the regulation and whether it is providing adequate disclosure to the membership prior to any vote on the matter. The Division believes that these additional disclosures will help mitigate concerns over whether the membership is afforded enough information to make knowledgeable decisions.
The Division supports the NCUA's proposal to set forth requirements for the form and manner for which a member vote is to be conducted. The Division strongly believes that, given the potential impact of a vote to convert from a credit union to a federal mutual savings bank, procedures utilized should be set at a high standard and the process be conducted in a fair and legal manner. As such, a vote conducted by an independent party by secret ballot would help maintain such integrity.
If you should have any questions regarding the contents of this letter, please call Senior Deputy Commissioner David Cotney (617) 956-1542. Once again, thank you for the opportunity to comment.
Very truly yours,
Steven L. Antonakes
Commissioner of Banks
cc: Mary Martha Fortney, President and Chief Executive Officer, National Association of State Credit Union Supervisors