WASHINGTON–America’s Credit Unions is voicing support for some of NCUA’s proposed updates to regulations governing mergers of insured credit unions into banks, while opposing several changes it said could weaken transparency and member protections during the conversion process.
In a separate letter, the Cooperative Credit Union Association also called for “strong disclosure requirements and member communication rights” to be preserved.
In a letter to the NCUA, America’s Credit Unions said it supports the credit union charter and cooperative model and does not advocate for policies that encourage conversions to bank charters. However, the organization said certain communication requirements in the agency’s existing rules no longer reflect how members receive information and should be modernized.
The comments were submitted in response to the NCUA’s proposal to amend Part 708a, Subpart C of its regulations, which governs mergers of insured credit unions into banks. America’s Credit Unions said the rule serves an important purpose by providing a framework for transactions that alter a credit union’s charter or structure and should continue to protect members during the conversion process.
Support for Eliminating Specific Directions
Among the provisions supported by the trade group is the NCUA’s proposal to eliminate the current definition of “clear and conspicuous,” which requires disclosures to appear in bold type and a larger font size. America’s Credit Unions said those formatting requirements were developed when print communications dominated and are less effective in today’s digital environment. The organization said credit union boards should have greater flexibility to present information in ways that best communicate with their members.
America’s Credit Unions also backed the agency’s proposal to eliminate a requirement that merger notices be published in newspapers of general circulation. The group said newspaper publication no longer reflects how members typically receive information and argued that posting notices on a credit union’s home banking landing page would be more effective.
Opposition to Reduction in Tranparency
At the same time, the association opposed several proposed changes it said could reduce transparency.
America’s Credit Unions objected to a proposal that would eliminate a requirement for boards to describe their due diligence process when selecting and negotiating with a merger partner. The trade group said members should have access not only to a board’s conclusion that a merger is in their best interests, but also to information explaining how the board reached that conclusion. Retaining the requirement would promote transparency, strengthen accountability and help members evaluate whether the process aligns with their interests, America’s Credit Union said.
The association also opposed removing a requirement that key regulatory disclosures be presented in a standardized, prominent format within member notices. It argued that the provision helps ensure members clearly understand the consequences of a merger, including potential impacts on their ownership interests, and prevents important information from being obscured within larger disclosure packages.
Support for Plain Language Requirement
In addition, America’s Credit Unions urged the NCUA to retain language requiring merger-related communications to be written in plain language. The organization said removing that requirement could result in inconsistent disclosure standards and make complex transactions more difficult for members to understand.
The trade group further opposed the proposed removal of non-regulatory voting guidance contained in Section 708a.312. While the NCUA has said eliminating the guidance would reduce confusion about what is mandatory, America’s Credit Unions argued the provisions provide practical assistance to credit unions administering member votes and help promote consistency throughout the conversion process.
‘Preserve’ Strong Disclosures, CCUA Urges
Separately, the Cooperative Credit Union Association, which represents CUs in Massachusetts, New Hampshire, Rhode Island and Delaware, is urging NCUA to reject proposed changes to regulations governing credit union mergers into banks, arguing the revisions would weaken member protections and reduce transparency in the conversion process.
In a comment letter submitted to the NCUA as part of the agency’s Deregulation Project, the association said it opposes a proposal that would remove or weaken existing requirements designed to ensure members are fully informed before voting on mergers involving federally insured credit unions and banks.
According to the Cooperative Credit Union Association, clear and conspicuous disclosures are essential when credit unions seek to merge into banks and members should retain meaningful opportunities to communicate with one another and make informed decisions before casting their votes.
Support for Strong Disclosures
In its filing, the association said it supports maintaining strong disclosure requirements and member communication rights, arguing that reducing those safeguards could limit members’ understanding of the potential implications of a merger.
The group said its position is consistent with comments it previously submitted in opposition to proposed changes involving credit union-to-mutual thrift conversions.
“Preserving strong disclosure requirements and member communication rights helps ensure members fully understand the implications of a proposed merger and can participate effectively in the decision-making process,” the association said in its comments.
The Cooperative Credit Union Association contended that transparency and member engagement are fundamental elements of the cooperative ownership model and should remain central to any merger or conversion process involving credit unions.
