On April 21, the NCUA announced a proposed rule to amend its regulations governing the merger of insured credit unions into banks under 12 CFR Part 708a, Subpart C, as part of its ongoing “Deregulation Project” (previously covered by InfoBytes here). The proposed rule would eliminate certain procedural, disclosure, and communication requirements that the NCUA deems overly prescriptive to reduce regulatory burdens and provide credit union boards of directors with greater flexibility to exercise their judgment.

Specifically, the proposal would: (i) remove the definition of “clear and conspicuous” from § 708a.301, which mandates specific formatting such as bold type and minimum 12-point font, allowing credit unions flexibility to design effective member disclosures; (ii) replace the requirement to publish pre-board-vote notices in a general circulation newspaper with a requirement to post on the credit union’s website and member home banking landing page; (iii) streamline the due diligence reporting requirements in § 708a.304(d) by removing the obligation for a board to describe how it located the merger partner and negotiated the agreement, focusing instead on the substantive justification that the merger serves members’ best interests; (iv) remove prescriptive formatting requirements in § 708a.305(e)(2), which dictate specific placement and presentation of certain disclosures; (v) simplify the plain language requirements in § 708a.305(f) by removing redundant determining factors; and (vi) eliminate the non-binding “Voting guidelines” in § 708a.312, which the NCUA stated may create confusion by blurring the line between mandatory requirements and advisory suggestions.

Comments must be submitted by June 22.