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NCUA responds to FCU director rule concerns
ALEXANDRIA, Va. (4/6/11)—Recent National Credit Union Administration (NCUA) rules on the duties of federal credit union directors, and limits on the forms of payment that those directors can be given, do not present new problems for credit union leadership, NCUA General Counsel Bob Fenner said. Fenner’s remarks were made in a recently published legal opinion letter. That letter responded to an earlier letter that was cosigned by the Credit Union Association of Colorado, the Credit Union Association of Wyoming, the Northwest Credit Union Association, the Montana Credit Union Network, the Arizona Credit Union League, the California and Nevada Credit Union Leagues, and the Idaho Credit Union League. The leagues alleged that the NCUA’s new rules addressing the duties of federal credit union directors create “a litigation trap for credit unions who may be accused of not acting in the interests of a particular faction” of credit union members. The letter added that many board actions can bolster the credit union itself without harming members. However, those members also may not “find immediate benefit,”the letter adds. Fenner said that the NCUA rule does not shift the burden of proof onto a credit unions directors, and does nothing to increase the odds of a successful lawsuit against those directors. Fenner also said that the NCUA’s rules do not require management “to consider only the ‘immediate’ benefit” to their members. “Directors can consider, and are encouraged to consider, the long term benefits” to their members, Fenner added. The Credit Union National Association (CUNA) is in active dialogue with NCUA officials on the issues addressed by this letter, and CUNA will seek clarification on the issues raised by the letter in further discussions with the agency. For the full legal opinion letter, use the resource link.
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