Letter to Rep. Moran re: H.R. 3206, the Credit Union Charter Choice Act of 2005

November 6, 2005

The Honorable James P. Moran
U.S. House of Representatives
2239 Rayburn House Office Building
Washington, DC 20515-4608

Dear Representative Moran:

As a long-time customer of a community bank in your district, I urge you to support and co-sponsor H.R. 3206, the Credit Union Charter Choice Act of 2005.

The notion of charter choice is fundamental to our financial system. All institutions should be able to select the charter under which they operate. A credit union that opts for a mutual savings institution charter does so in order to meet the financial services needs of its customers and communities. Among the advantages for the converting credit union’s community is greater access to small business loans and mortgages. The credit union also gives up its exemption from federal income taxes and begins to comply with federal community reinvestment laws.

Unfortunately, credit unions that seek to convert to a mutual savings institution are being denied freedom of choice and self-determination. The National Credit Union Administration has obstructed this process and has taken inappropriate steps to make it increasingly difficult, if not impossible, for credit unions to convert to mutual savings banks.

The NCUA requires disclosures to members that are misleading and conflict with the regulations of the federal Office of Thrift Supervision. Moreover, the NCUA administers its conversion regulations in a fashion designed to prevent an open and balanced debate of the conversion among a credit union’s membership. For example, the NCUA has invalidated the conversion process of two Texas credit unions under the pretense that a required disclosure was not properly folded.

H.R. 3206 would eliminate the obstructions that the NCUA injects into the conversion process. Specifically, the legislation would 1) enable converting credit unions to speak freely to their members, the public, and the media about the conversion, 2) ensure that members of a converting credit union are given accurate and complete information about the conversion, and 3) provide certainty in the conversion process for credit unions and their members.

The NCUA is a rogue regulator that is discouraging future conversion attempts and wasting credit union resources. Please help rein in the NCUA by supporting and co-sponsoring H.R. 3206.

Sincerely,

James A. Landrith, Jr.