The National Credit Union Administration (NCUA) may approve a credit union's request to alter its charter and, subsequently, merge with another credit union with the same field of membership, NCUA General Counsel Michael McKenna said in a recently released legal opinion letter.
The Federal Credit Union Act (FCUA), as amended by the Credit Union Membership Access Act (CUMAA), gives the agency the authority to approve such a charter conversion and subsequent merger, McKenna wrote.
CUMAA was approved in the late 1980s by the U.S. Congress, in part, to allow the chartering of multiple common-bond credit unions. The Supreme Court had previously ruled multiple common-bond charters were not permitted under the FCUA.
The American Bankers Association (ABA) challenged the NCUA's implementing regulations in court, but the ABA challenge, and subsequent appeals, were defeated.
These court decisions support NCUA's discretion under the FCUA to approve the voluntary merger of two healthy multiple common-bond credit unions, McKenna said in the NCUA legal opinion letter. "In addition, NCUA has discretion under the FCUA to approve a change to a credit union's charter to facilitate a voluntary merger with another healthy credit union," he added.
However, the applicant must satisfy the criteria for a charter change, as spelled out in FCUA and NCUA regulations, McKenna said.
For the full NCUA legal opinion letter, click here.