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An NCUA Proposal That Would Be More Valuable Than A Bucket Of Warm Spit

The hallmark of former NCUA Chairman Dennis Dollar's term was making life better for members by reducing the regulatory load on their credit unions. Ironically, the hallmark of current NCUA Chairman JoAnn Johnson's could very well be to have made life better for those same members by adding a regulation or two.

In particular, regulations related to a little something called "bylaws." John Nance Garner, and if you don't recognize the name then you'll appreciate the following quotes, was vice president for the first two terms of Franklin Roosevelt's presidency. He declined to join FDR in his third run for office, and urged the president not to run. Garner was no fan of being the No. 2 guy, having observed on separate occasions that the vice presidency was the "worst damn fool mistake I ever made" and later and more famously, that the job wasn't worth a "warm bucket of spit." (Allegedly, reporters at the time, in order to report the quote, changed what Garner actually said to "spit.")

Credit union bylaws, supposedly the constitution upon which every credit union is founded and operates, have been exposed in the last two years as apparently also belonging in that same bucket. Board members at several credit unions, in particular DFCU Financial in Michigan, have spit on the bylaws and their own members. If you've been following the DFCU Financial situation, you know members exceeded by about 300% the bylaws requirement that 500 member signatures were needed to call a special member meeting at which a board recall would be discussed. The board's response? Bylaws, schmylaws, we're not holding any such meeting.

When those members leading the recall effort turned to the federal regulator for help, they found the door closed. DFCU Owners United was turned back at the federal court level, and has now turned to the state courts. If this process needed a logo it would be the three monkeys of "See No Evil, Hear No Evil, Speak No Evil" fame.

Perhaps NCUA is a little gun shy after having been castigated by some, including one woefully uninformed congressman, for weighing in on the disclosures provided to members at two credit unions in Texas that later converted to banks. So it was good to see NCUA's Johnson issue a statement several weeks ago that she wants to see a review of how bylaws are enforced-especially critical when members of the Supervisory Committee who are supposed to, get this, independently "supervise" the board, stand to make the same insider profits during a charter conversion as the board.

"I want a top-to-bottom assessment of the standards and practices through which a member relates to their credit union, and recommendations for possible changes in their enforceability," said Johnson in a released statement.

The risk, of course, is that the reviews will be conducted and executed by lawyers teamed up with government bureaucrats and credit unions could end up with gigabytes of gover-legalese when just a simple sentence or two would do the trick. I'm hopeful the agency's language will be clear and concise, and just a little wishful that the new reg will also state," And if you don't follow the rules we'll stick your head in a bucket of warm spit.

Publisher Frank J. Diekmann can be reached at fdiekmann<at>cujournal.com.

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