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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What is Credit Union Regulatory Guidance Including: NCUA, CFPB, FDIC, OCC, FFIEC?

This podcast provides you the ability to listen to new regulatory guidance issued by the National Credit Union Administration, and occasionally the F D I C, the O C C, the F F I E C, or the C F P B. We will focus on new and material agency guidance, and historically important and still active guidance from past years that NCUA cites in examinations or conversations. This podcast is educational only and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated. We also have another podcast called With Flying Colors where we provide tips for achieving success with the N C U A examination process and discuss hot topics that impact your credit union.

Samantha: 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.