NCUA's Authority to Remove Officials
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Hello, this is Samantha Shares. This episode covers N C U A’s Enforcement Manual Section on Removal of Officials.
The following is an audio version of that advisory and the press release. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.
And now the N.C.U.A. enforcement manual on removal of officials.
What is an NCUA “ removal” action?
A removal action is the administrative action to remove directors, officers, or committee members. This action is available as an initial course of action or as a continuation of a cease and desist order if the officials refuse to comply as directed. Whether this enforcement action is an initial course or a continuation of a cease and desist order, it is separate and has its own applicability to particular situations. Section 206(g) of the FCU Act, 12 U.S.C. section1786(g), contains NCUA's authority to issue a removal order; NCUA Rules and Regulations section747, Subpart A, contains the rules and regulations governing removal administrative hearings.
It may become necessary to initiate formal removal action where a breach of fiduciary duty occurs on the part of the director, officer, or committee member and where the credit union's board will not or cannot discharge the responsible person and where that person does not voluntarily resign.
Removal of a director, an officer, or a committee member is not anticipatory in nature as in a cease and desist action. Removal is appropriate only when an official committed an act that constitutes grounds for removal, i.e., it cannot be imposed for future or threatened conduct. Removal can follow only if NCUA has issued a Notice of Intent to Remove or a Notice of Suspension and Intent to Remove and after completion of the appropriate administrative proceedings as provided in the FCU Act and NCUA Rules and Regulations.
NCUA may remove a person even if they voluntarily resign or are terminated by the credit union. A removal action may be brought any time up to six years after resignation, termination of employment, liquidation, or any other termination of a relationship with the credit union (see section206(k)(3) of the FCU Act, 12 U.S.C.
section1786(k)(3)).
Any party who has been removed or suspended from office is also automatically removed, suspended, and prohibited from participating in the affairs of any federally insured financial institution without the express written consent of the appropriate regulatory authority.
1. What are the grounds for removal of an official?
NCUA can remove from office any directors, officers, or committee members if:
They directly or indirectly violated one of the following:
► A statute or regulation.
► A provision of a Final C&D Order.
► Any published written agreement between the NCUA Board and the credit union.
► Any condition imposed in writing by the NCUA Board related to granting any application or request by the CU (e.g. application for insurance or 208 Assistance).
► Engaged or participated in any unsafe or unsound practice related to the credit union.
► Committed or engaged in any act, omission, or practice constituting a breach
of fiduciary duty.
And
Their actions either:
► Involved personal dishonesty.
► Demonstrated their unfitness to participate in the credit union's affairs.
And
Their actions resulted in at least one of the following:
The credit union has or will suffer financial loss or other damage.
The interests of the members have or could be prejudiced.
The party receives financial gain or others benefit because of the violation, practice, or breach
This concludes the NCUA Letter to credit unions on TOPIC
If your Credit union could use assistance with your exam, reach out to Mark Treichel on LinkedIn, or at mark Treichel dot com. This is Samantha Shares and we Thank you for listening.
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