NCUA Board Approves Updated Member Expulsion Rule

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This article first appeared on CUCollaborate

The NCUA board on Thursday adopted a final rule making it easier for credit unions to expel members from their institutions for cause, such as violence or disorderly behavior.

The rule, which passed unanimously, will allow credit unions to adopt a policy allowing for the expulsion of a member for cause by a two-thirds vote of a quorum of the institution’s board of directors.

In the past, credit unions could only expel a member for misbehavior based on a two-thirds vote of the credit union’s membership.

However, Congress passed legislation in March 2022 to make the process easier.

Board member reaction

“While I will vote in favor of today’s final rule, I continue to believe credit unions should use these new powers sparingly,” NCUA board Chairman Todd Harper commented at Thursday’s meeting. “In other words, credit union member expulsion should be the exception and not the rule.”

Harper said the rule strikes a balance between having to serve violent members and providing members with due process.

The final rule requires a credit union to provide all members with its expulsion policy before a member can be expelled. A member being considered for expulsion also may request a hearing before a final decision is rendered.

Board member Rodney Hood likewise supported the rule, but stressed that, “the expulsion of members is an extreme remedy that may have the effect of denying individuals access to financial services.”

Board Vice Chairman Kyle Hauptman also voted for it, commenting, “This rule considers the significance of member-owners, but it also gives credit unions the same flexibility as any other business to address threats to the safety of staff and the public.”

Enhancing CURE’s Consumer Access Division

The board additionally approved the reprogramming of funds from its 2023 budget for the hiring of two consumer access positions in its Office of Credit Union Resources and Expansion (CURE), as well as four cybersecurity employees.

The funds will be used to augment CURE’s consumer access efforts. The Consumer Access Division processes field of membership expansions, bylaw amendments, low-income designation requests, charter conversions and other special projects, according to a staff memo prepared for the meeting.

Looking ahead

That memo also states that in the past few years, the NCUA has received an increased number of applications. As a result, the estimated workload of the office for 2023 is more than double its workload in 2018.

At the end of the meeting, Hood acknowledged that his term ends next month, and he promised a seamless transition after a replacement is nominated.

Author

  • David Baumann

    David Baumann established and edited the Washington Credit Union Daily website before it was put on hiatus while he served as the editor of the regulatory and legislative blog at CUCollaborate. Before starting Washington Credit Union Daily, David was the Washington correspondent for the Credit Union Times. A veteran Washington reporter, he has spent his career writing and editing for many of the capital’s leading publications, including CongressDaily, National Journal magazine and Congressional Quarterly Weekly. He was part of a team that won a 2005 National Headliner Award for a special issue of National Journal on “The State of Congress.” He holds a B.A. in political science from The George Washington University and an M.A. in journalism from Indiana University.

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