What’s in a Name? That Which We Call a Board…
May 27, 2014
May 27, 2014
“What’s in a name? That which we call a rose by any other name would smell as sweet.” Now the Washington State Department of Financial Institutions has also taken up the question.
DFI recently issued Interpretive Letter I-14-03 about referring to a board of directors as a “board of trustees”. While not addressing whether the board by any other name would smell as sweet, the letter does address the function a board performs within the credit union, whether its members are called directors or trustees.
It is the DFI’s opinion that it is permissible for a state credit union to officially refer to a board of directors as a board of trustees, but the official use must be properly memorialized in an appropriate governing document. The credit union would not need to amend its articles of incorporation, because the memorialization may be achieved by amending the credit union’s bylaws. As a best practice, the state credit union would amend its bylaws to say that the official use of the terms “board of trustees” and “trustees” does not alter their duties and rights.
The Director of Credit Unions expects that bylaw amendments contain language that:
- Officially designates the board and the board’s members as the “board of trustees” and “trustees”;
- Clarifies that the board is the “board of directors” authorized under the articles of incorporation, and that the “trustees” are the authorized individual members of the board; and
- Makes clear that no greater or lesser powers, duties, privileges, immunities, limitation of liability, or indemnity are being conferred by such official denomination, other than as set forth in the articles of incorporation and the bylaws.
Question of the Week
Can a state-chartered credit union expel a member? If so, how?
Yes, state-chartered credit unions in both Oregon Washington can expel a member.
In Washington, the credit union must adopt bylaws that explain the procedures for expelling a member. The credit union’s board of directors is responsible for establishing the conditions under which the member may be expelled for cause. Once a member is expelled, they must be notified of the expulsion and given the reasons.
Upon request, the expelled member can challenge the expulsion and seek reinstatement. The amounts in an expelled member’s share account and deposit accounts must be promptly paid to the person following expulsion and after deducting any amount due to the credit union. If the person has additional liabilities, expulsion will not relieve them of what is owed to the credit union.
It is important to note that credit unions must treat all members equally. So, if your credit union chooses to expel a member because (s)he has lost his or her ATM card 5 times over the course of a year, all members who do this must also be expelled.
Oregon state-chartered credit unions may also expel a member who:
- Has not carried out the member’s engagements with the credit union;
- Has been convicted of a criminal offense;
- Fails to comply with the provisions of this chapter or of the credit union’s articles, bylaws, or policies;
- Threatens, harasses or abuses any member, employee, board, or committee member or agent of the credit union; or
- Habitually neglects to pay the member’s debts or becomes insolvent or bankrupt.
Oregon credit unions that expel members must inform the member in writing of the reasons for the expulsion and give the expelled member reasonable opportunity to request the credit union’s board of directors to reinstate the member.
National Credit Union Administration (NCUA)
The NCUA released its Board Action Bulletin from the May board meeting.
The NCUA has released a new guide for credit unions to use when considering a merger.
The NCUA announced that it will begin assessing fines for late filings of the 5300 Call Report.
Consumer Financial Protection Bureau (CFPB)
The CFPB has extended the comment period to June 6, 2014, for amendments to the Remittance Transfer Rule.
The CFPB has released its Spring 2014 Rulemaking Agenda.
The CFPB announced that it will allow the public to attend its board meetings.
The CFPB released a study it conducted on medial debt and how it impacts consumer credit reports.
Financial Crimes Enforcement Network (FinCEN)
FinCEN issued an advisory on passport abuse relating to Citizenship-by-Investment programs.
Federal Reserve Board (FRB)
The minutes for the April 2014 Federal Open Market Committee meeting have been released.
The FRB has published its 100th Annual Report to Congress.
Department of Financial Institutions Division of Credit Unions (DCU)
The DCU released an interpretive letter regarding the term “Board of Trustees” being used instead of “Board of Directors” for Washington State-Chartered credit unions.
Office of Foreign Assets Control (OFAC)
OFAC has updated the SDN list as of May 23. The last update prior to this was May 20.
Questions? Contact the Compliance Hotline: 1.800.546.4465, email@example.com.