WASHINGTON (CN) – The National Credit Union Administration has changed the definition of “troubled condition” as it is used to trigger a credit union to notify the NCUA so it may disapprove a change of credit union officials. Generally, the current definition allows only a state supervisory authority (SSA) to declare a federally insured, state-chartered credit union (FISCU) to be in “troubled condition,” NCUA said in its new rule.
The amended definition allows either NCUA or an SSA to make the declaration, so a FISCU in “troubled condition” may be identified as early as possible, the rule said.
NCUA may now act preemptively to ensure that the officials who take control of a FISCU in “troubled condition” are qualified to address its troubles. This gives the National Credit Union Share Insurance Fund a further measure of protection against the risk of loss, according to the rule.
NCUA may disapprove an individual when “the competence, experience, character, or integrity of the individual * * * indicates that it would not be in the best interests” of the credit union’s members or the public for the individual to serve, the rule said.
The individual or the credit union may appeal the disapproval to the NCUA.
The rule is effective Feb. 19.
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