NCUA's Authority to Remove Officials
Samantha: Hello, this is Samantha Shares.
This episode covers N C U Aâs 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.
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And now the N.C.U.A.
enforcement manual on
removal of officials.
What is an NCUA â removalâ 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:
⺠A statute or regulation.
⺠A provision of a Final C&D Order.
⺠Any published written agreement between
the NCUA Board and the credit union.
⺠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).
⺠Engaged or participated in
any unsafe or unsound practice
related to the credit union.
⺠Committed or engaged in any act, omission,
or practice constituting a breach
of fiduciary duty.
And
Their actions either:
⺠Involved personal dishonesty.
⺠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
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This is Samantha Shares and
we Thank you for listening.
