WASHINGTON (5/5/14)--In its proposed updates to voluntary liquidation rules, the National Credit Union Administration should reinforce that liquidation of a credit union is a drastic step and should be only be undertaken when no other options are viable, the Credit Union National Association said in a comment letter filed with the agency last week.
The proposed liquidation rule updates, released at the February NCUA open board meeting, would permit liquidating federal credit unions to publish required creditor notices in electronic media or newspapers of general circulation.
It would also increase the asset size threshold for requiring multiple creditor notices, by exempting federal credit unions with less than $1 million in assets from the publication requirement, and exempting federal credit unions with less than $50 million in assets from the multiple publication requirement.
Other portions of the update impact how credit union members will be refunded their member shares in the event of a liquidation. NCUA Chairman Debbie Matz in February said the changes are intended to modernize the rule and factor in credit union growth since 1993, which was when the rule was last updated.
"We recognize that a small number of credit unions may choose to liquidate, but we urge NCUA to add language to the rule requiring agency staff to work with a credit union considering such an option to find ways to either continue operation or merge with another credit union, in order to ensure members will continue to have access to a credit union if at all possible," CUNA Deputy General Counsel Mary Dunn wrote.
While it generally supports the agency's efforts to update the rule and generally agrees with it, CUNA has recommended some changes.
"Consistent with longstanding CUNA policy, we believe that credit union liquidation should only occur as a last resort," Dunn added.
For more on the changes, use the resource link.