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JT Blau Of The Virginia League: Deep Dive On Member Expulsion



In today's discussion, JT Blau from the Virginia Credit Union League brings attention to the recently enacted NCUA Member Expulsion Rule. He uncovers its implications for credit unions and members alike. JT begins by explaining the different types of member behaviors that could result in expulsion. As the conversation progresses, JT shares expert advice on how credit unions can approach this groundbreaking rule. He discusses the crucial first steps, including updating bylaws and developing comprehensive policies and procedures. JT's expertise shines as he highlights the importance of consistent documentation, fair treatment, and the alignment of existing policies with the new rule. Don't miss out on this eye-opening discussion that may well shape the future of your credit union. Tune in now!


JT answers these questions and more:

● What type of member behavior makes them subject to expulsion in this method?

● What are the required notices that need to be sent out?

● What are the procedures for the hearing, the member vote, and the request for reinstatement if the member makes one?

● If my credit union wants to do this, what do we need to do first (bylaws amendments, policy and procedures)?

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Listen to the podcast here


JT Blau Of The Virginia League: Deep Dive On Member Expulsion


I'm here with JT Blau. JT, how are you doing?


I'm good. It's great to see you. I've been tuning in to your show, and it's been a terrific resource. I'm thrilled to be a part of it.


I appreciate those kind words. You and I connected on LinkedIn. You're with the Virginia Credit Union League. I recorded a short show on my take on an action that the NCUA Board had taken as it relates to the bylaws and member expulsions. You reached out to me and I know you've been working on blogs and different things. You know this much better than I do. It's great that you could get on so quickly and help educate my audience on what this rule might mean for them. I appreciate you reaching out so we could get on and record this timely.


I’m happy to help.


Before we jump into that, I want to give the audience a little bit of your background. JT serves as the Chief Advocacy Officer for the Virginia Credit Union League, leading the league's advocacy work at the state and federal levels. He also oversees the league's regulatory compliance resources and advocates for credit unions by engaging with both state and federal regulators. He joined the league in June of 2022 after seven years at all Federal Credit Union in Richmond, Virginia, where he oversaw compliance, HR, BSA, and other areas as VP of Risk Management. JT received an MBA from the University of Richmond in 2013, a JD from the University of Richmond in 2011, and a BA in government from the College of William and Mary in 2008.


Thanks again for being available. That's an impressive resume. I know you've got a lot of expertise in this. Let's jump right in. The rules out there, it was proposed and it was required as part of a change in the Federal Credit Union Act. The board finalized it. They made some tweaks based on a bunch of the letters that came in. I'm guessing you probably may have contributed to some of those letters and maybe potentially influenced the final rule. With that, the first question I would have as it relates to expulsion is, there are certain things that you can get expelled for and certain things that you can't. What are the types of member behavior that would make them potentially subject to expulsion under the rule?


This process that is laid out in the final rule is a method by which the board can expel a member for cause. The final rule does define for cause there. There are three buckets that you can fall into to be for cause. The first is a substantial or repeated violation of the membership agreement of the credit union. The second is a substantial or repeated disruption, including dangerous or abusive behavior to the operations of the credit union.

The third is fraud, attempted fraud, or conviction of other illegal conduct in relation to the credit union. If a credit union is thinking about using this new final rule, it's important to understand those buckets and make sure that the member behavior falls into one of those.


A couple of things I want to break down here. The first is that, substantial or repeated violation of the membership agreement. The keyword here is "or." It can be substantial or repeated. That means you can have one substantial violation or multiple non-substantial violations. An important thing to note about multiple non-substantial violations is the member has to be sent a warning letter. If they exhibit some conduct or have a violation that the credit union deems is a non-substantial violation of the membership agreement, the credit union has to send them a warning letter. You have to say, "Here's your conduct. This is why it's a violation. If you do this again, you may be eligible for expulsion."


The member has to have some notice there if we're in the bucket of non-substantial violation of the membership agreement. The last thing there that, that the board noted in this final rule is that, if they exhibit that behavior again to make it repeated, it has to be within two years of them getting that warning letter. If they have this conduct, you send a warning letter, and then within two years, they exhibit it again, that would make it a repeated violation of the membership agreement.


As I said, it can also be a substantial violation, and that's just a one-time thing. That raises the question, "What qualifies as substantial?" The board took a lot of feedback from commenters on this issue. They chose to leave this up to the credit union. They recognize a lot of these situations are very fact-dependent and they didn't feel like prescribing a universal policy to all federal credit unions would be feasible in this situation. What they did do is give two examples of behavior that they would view as not a substantial violation.


Of the two that they highlighted, the first one was a member failing to keep their account secure. The example they gave was, for example, writing a pin on the back of their debit card. Credit unions will know what I'm talking about here. A member writes their pin on the back of the card and then loses the card. Someone gets it, they've got the card, they've got the pin, they're ready to go, and they withdraw cash out of that account.


In that situation, the board said, "This is not something that would qualify the member for expulsion under this process." In that case, they would recommend limiting their services. Limiting access to a debit card. The other situation, which the NCUA described in the rule was a member filing bankruptcy or a member being forced out of a bank and coming to a credit union.


The board recognizes that these are sources of potential harm to the credit union, but not actual disruptions or violations. They didn't give a clear framework of what they view as a substantial violation, but they did give a couple of examples of what they don't view as a violation. A credit union can use that in making their determination as to the facts of each situation and does it rise to this certain level. That's the first bucket that a member's behavior could fall into.


The second is a substantial or repeated disruption, including dangerous or abusive behavior. The first question with this one is, "What qualifies as dangerous or abusive behavior?" We look to the rule and the NCUA says that this type of behavior includes violence, intimidation, physical threats, harassment, or physical or verbal abuse of officials, employees of the credit union members, or agents of the credit union.


They do have some language in there describing what could qualify as dangerous or abusive behavior. They give a few examples of dangerous or abusive behavior. They also give some examples of some things that by themselves would not qualify as dangerous or abusive behavior. They say things like expressions of frustration through elevated volume or tone. If a member calls in, they're frustrated, and they raise their voice. Expressions of intent to sue the credit union. These things by themselves would not necessarily rise to that level, but it's very fact dependent. The credit union has to look at a whole slew of factors when making this determination.


An important note on this piece is that there was some discussion in the proposed rule about whether or not this behavior should have to take place on credit union premises. In the final rule, the board ultimately determined that this is not a requirement. The behavior does not have to take place on credit union premises. They know that behavior can take place over social media and over the phone. Someone could even follow a credit union staff member to another location. There's a whole slew of factors where situations where behavior could be dangerous or abusive and not be at a branch. They were wise in crafting this rule so that conduct can be dangerous and abusive and meet that standard without having to be on-site on a branch.


The last thing is that dangerous or abusive behavior does have to be tied to the credit union's operation. If a credit union found out that a member stole a car or did something at another bank or something like that, that would not be tied to the credit union's operation.

That by itself could not be dangerous or abusive behavior in the context of member expulsion.


On not having to be at the premises, you said this, but could you repeat it or clarify it for me? Was that something that they asked about in the proposed rule that they then finalized? Was that something that maybe some people commented on? How did that go from proposed to final?


I believe it was written as is in the proposed rule, but it is something that they requested specific comments on. I believe that was unanimous. Every commenter wrote in and agreed that this should not be required to take place on credit union premises.


That makes sense. You can say to me things in all those other venues in the example of following somebody home. It seems to me that the safety side of it is the hub of the wheel, the thing that makes this a good rule, but in the world, we live in, this is probably why Congress changed the act saying, "We need to make sure that credit union members and credit union staff can be safe."


Every credit union person tuning in to this is probably thinking of at least 1 or 2 members in their mind that may exhibit this type of behavior. It's the reality of the situation. When I was working for a credit union on day one, I met a member who had a reputation for coming in and exhibiting this type of behavior. Our hands were somewhat tied in the actions that we could take. That's why I do believe this is a positive development for credit unions, for the safety of staff and other members.


It's a good rule. If you think of it from the law enforcement perspective, getting a restraining order can help you, and it can end up saving you and preventing some situations because there'll be people who will stay out of this situation. It's not the be-all and it's not an absolute because things can still go awry, but it puts in place the options to try and best protect your staff. It's a great rule.


Last thing I was going to touch on with the third bucket there is fraud, attempted fraud, or conviction of other illegal conduct in relation to the credit union. The important thing here, the thing of note is that the board in the proposed rule did solicit feedback on whether they should define fraud or attempted fraud. They ultimately decided not to. They also recognized this is a very fact-dependent situation. They left that up to the discretion of the credit union. What the final rule does make clear is that conviction or other illegal conduct, a conviction is not required for fraud or attempted fraud. It's fraud, attempted fraud, or a conviction of other illegal conduct. There's no conviction required for fraud to be grounds for a member expulsion.


I'm leaving the definitions to the credit unions and the facts that are present. That's another good approach. NCUA doesn't define safety and soundness, but credit unions have to live through what that might mean on a daily basis. It's the facts that drive it. Individually, by not defining it, they've given the credit unions as much flexibility to decide if it makes sense that it rises to the level.


These are very fact dependent. A lot of gray areas in these situations, so I agree with your assessment there.


Going back to the first one, the substantial or repeated violation. if I heard that right, if it's substantial, then you have the legal threshold of it being substantial. If it's less than substantial, it falls into the repeated violation and that's when the pre-warning would have to go out. Repeated means more than one, so the second one would have to come within two years. Am I right in everything? It's like, substantial is here, and then everything else that might rise to the level falls into a repeated violation?


Is this violation substantial or non-substantial? If it's substantial, then that's automatically grounds for this process. If it's non-substantial, then you have to send them a warning letter saying, "Don't do this again." Then they have to exhibit that same behavior within two years. It then becomes a repeated violation of the membership agreement.


That's helpful. I can almost visualize a flow chart in a policy that someone might have, which gets me to my next question. What are the required notices that need to be sent out as it relates to this program, etc.?


The first one is, you have to give a notice of the expulsion policy to all of your members. Once a credit union has this policy in place, before exercising it on any member, every member has to be notified of the policy. The good news for us, credit union compliance officers, there is a standard disclosure within the final rule. If you scroll to the end of it, you'll see it there at the bottom and they've laid out, "This is an optional standard disclosure," which is a form. It's a fill-in-the-blank. There are some bracketed areas where you would insert the name of your credit union here. It's a few paragraphs, and it lays out the expulsion process. This has to be sent to all members.


WFC 125  | Member Expulsion
Member Expulsion: Once a credit union has this policy in place, before exercising it on any member, every member has to be notified of the policy.


In terms of how that's sent, the NCUA ultimately landed on either mail or electronic delivery. If your member has opted into receiving electronic communications, you can send it to them electronically. If they haven't, you can send it by mail. I bring this up because, in the proposed rule, the NCUA board noted that they were considering requiring both electronic and mail delivery notices. That speaks to how seriously the NCUA wants to make sure that everybody receives this and knows what the process is before they are subject to it. They did ultimately steer away from that approach. You can send it to them in one format or the other however they've indicated to your credit union that they want to receive communications from you.


I know you listened to what the board had to say. I listened to what the board had to say. All three board members, but Chairman Harper, in particular, is the democratic process. Your part owner, so to expel an owner as a very high bar and you can tell that they're wanting it to be used judiciously. Probably the belts and suspenders of electronic and hard copy are where that came from, but the process works. Credit unions wrote in and explained why that might be burdensome and they back off of that appropriately. That's a good get.


The next notice is called the pending expulsion notice. If a member exhibits a certain behavior or has a violation and the board is going to pursue this expulsion process, they have to be notified of that. This is the letter that goes out to the members saying, "You're subject to expulsion." The big thing here is it has to tell them why. The board did not feel it was appropriate to have a standard notice here. They thought that it was more appropriate for each credit union to tailor the notice to their specific member and the situation. What they did do is lay out a number of things that should be in that notice. Things like relevant dates, and sufficient detail for the member to understand the grounds for expulsion and why they are facing expulsion.


It has to tell them that they have a right to request a hearing and how to do that. They should talk about the procedures of the hearing. They should note in that notice that any complaints related to the member's expulsion should be submitted to the NCUA's Consumer Assistance Center. There are a few elements in that final rule that you can read through and say, "These are the things that have to be in this notice and letter."


One thing that was also brought up in the rule is you have to be detailed in that letter. You don't have to use specific names. The board recognized that these are often hostile or tense situations. They found it appropriate for the credit union to be able to use generic terms such as, “You had this interaction with a teller or with a loan officer.” You don't have to use specific names of staff members in the letter itself, which is a good policy for the safety of credit union staff.


They have to be sufficiently on notice as to why they're looking at this. You can't just say you engaged in dangerous behavior or you violated the membership agreement. You have to tell them how they violated the membership agreement. You have to tell them what behavior they engaged in was deemed dangerous or abusive. The final rule is very clear about the need for some detail in this regard. The last thing on that is just like the previous notice this can be provided either electronically or by mail, however the member has indicated they want to receive communications.


The last notice required notice is the notice of expulsion. If they get the notice of pending expulsion, maybe they request a hearing and then afterward, the notice of expulsion. This is the letter that tells them that they've been expelled. This is after the vote of the board of directors. This is another one where the rule states a lot of things that should be in this notice. It should state the reason for the member's expulsion. If there was a hearing and they made some statements, they should provide a response to the member statements. It should have information about how your accounts are going to be wrapped up. If there are funds that are going to be applied to an existing loan or anything like that, that should be addressed in this letter as well.


Finally, it should state that the member has an opportunity to request reinstatement. We're going to go over that in a little bit, but that's the next part of the process. In all cases, there are three required notices. You've got your notice of the expulsion policy to all members. If you've got a pending expulsion notice, the letter saying, “The board's considering expelling you,” and the notice of expulsion, the letter that tells them that they have been expelled. Those are required in all cases. As we talked about before, there's a fourth notice that's required in some cases, that warning letter. That written notice of non-substantive violations of the membership agreement. Again, not required in all cases. In all cases, you're looking at 3 notices, and in some cases, 4.


That's a good explanation. One of the things you mentioned there that I also picked up on in the board presentation is this. There was a question about appeal rights and there was the statement about you cannot appeal it. If they can complain to NCUA about what happened, but they cannot appeal it to NCUA, meaning that NCUA cannot look at it and go, "As a regulatory body, we disagree with what the credit union did. You need to make this person a member." However, they can complain to NCUA saying that they thought they were being handled misappropriate.


Putting my NCUA hat on, the ridiculous example makes the best example sometimes. I'll call it a rogue mean Federal Credit Union. That's the name of the credit union. They're purging members left and right. NCUA gets 5 or 10 complaints about that. Maybe that's a scenario where NCUA would take some action against the credit union but it's not an official appeal right. They laid out what the appeal rights were in the rule, but I wanted to clarify that side. They can complain but not appeal to NCUA. Any thoughts you want to add to that comment?


I would agree with that. There is no formal right of appeal, but they can complain to NCUA. As you said, NCUA is not going to look at this one complaint that comes in and tell the credit union that they have to reverse their decision. What they're going to be looking at is the credit union using this to maybe expel a class of members instead of individual members. NCUA is very clear in the final rule that this is to be used on a case-by-case basis on individual members, not to expel a class of members. The NCUA would be looking at that in part of these complaints.


An editorial comment that I made in my solo show on this topic is that one thing that jumped out to me was the staff member said into a panel look at this during an exam. The NCUA board chairman said, "We’ll look at this during the exam." In my mind, it goes back to how important Todd Harper, the chairman, believes the right ownership is. It made me chuckle because I remember being in situations where my phone would immediately ring from a regional director calling me saying, "I haven't seen the memo that says this is a new policy. How does it fit into large credit unions? How does it fit into small credit unions? It would always end with, "Does my staff get an extra hour to do this at every exam?"


Some of those conversations may have happened or may be about to happen at NCUA, but the chairman has the ability to heavily influence exam procedures and policies. it'll be curious to see what credit unions start to see the questions that might be asked. I'll even go so far as to say it, in the priority letter to credit unions that comes out. In the end, they have some statements they make. There might be a reference to this under consumer compliance that, "We could be looking at this gathering data." It's like they did on overdrafts. We're taking a look at it. We may do some policies on it, depending on what we find. It's quite possible it might get dropped into a letter to credit unions coming up here.


Let's talk about the hearing and things like that. What are the procedures for the hearing, for the member vote, and the request for reinstatement if the member makes such a request?


We've gotten to this point. We've sent a notice of expulsion policy to all of our members. We've sent a pending expulsion notice and they've requested a hearing. The first question is the format of the hearing. Does it have to be in person? Can it be over video, phone, or written submissions? How does that work? The NCUA solicited sub-comments on this as part of the proposed rule to final rule process. Everyone expressed concern with the idea of an in-person hearing being required. You can imagine why a case of a dangerous or abusive member requiring an in-person hearing with a volunteer board of directors is not a great situation.


The NCUA agreed. They said, "The credit union can choose to have this be either in person or on video conference. If a member is not able to do a video conference, the credit union can offer a telephonic hearing. The member also has the option that if they want to be heard, but don't necessarily want to speak on their behalf, they can do a written submission to the credit union. There are four methods. What the NCUA made clear is that in-person and video conferences are the two primary methods.


The credit union should be doing one of those two. For feasibility or another reason those don't work, there are two backup methods. That's telephone and written submissions. The credit union has some discretion in terms of the format of the hearing but it should be either in person or via video conference unless the situation dictates otherwise.


If the situation dictates otherwise, you could have a credit union say, "We'll do it in person," but the person says, "I'm out of town. Can I do it on the phone? I want to do it in writing." Leaving the flexibilities there, but that might be some examples of why that would make sense.


We get to the structure of the hearing itself. In the final rule, the NCUA board didn't give a toll lot of guidance on the structure of the hearing. They leave this a lot up to the discretion of the credit union. They said, "We want these credit unions to have the flexibility to conduct these hearings as they deem appropriate. There are no standard procedures. In terms of things like who gets to testify, in what order, time limits, and who can ask questions. That's all up to the credit union.


From the NCUA's perspective, the most important thing for them was that this is to be a fair process with appropriate opportunity to be heard. They didn't get into the weeds of the hearing procedures themselves. What they did note is that if you have in your parliamentary procedures that your bylaws say you have to conduct your annual meeting by, those do not apply to these hearings. You don't have to have these meetings conform to Robert's rules of order or whatever is prescribed in your bylaws.


WFC 125  | Member Expulsion
Member Expulsion: From the NCUA’s perspective, the most important thing for them was that this is to be a fair process with appropriate opportunity to be heard.


One interesting question that I thought came up in the proposed rule and rule process was, "Can subsequent conduct be considered?" Say, for example, I send a member a letter saying, "You've had attempted fraud, and that's subject to expulsion." We send them a letter saying that we're going to have this hearing for their attempted fraud. In the meantime, before that hearing, they exhibit dangerous or abusive behavior. The question was, can that subsequent conduct be considered as part of this hearing? The answer from NCUA was no.

They want the member to be able to have the opportunity to defend themselves and to explain their situation.


If it's not in the notice, then it can't be part of that hearing if it's completely separate behavior. That's an important thing to note. You could see that situation where a member gets a letter that they're being expelled and maybe has some dangerous or abusive behavior. The ruling from the NCUA and the final rule was that, if it's a different behavior, then it can't be part of that hearing.


That's like a personnel action. We're taking these personal actions for these reasons, and then something more egregious happens. In the second letter, you start addressing those things. You can complicate in that scenario, the due process you're giving to the employee that you're taking these actions against if you weave in a new fact pattern. That makes perfect sense.


I will note that, as a slight clarification, if it's the same behavior, that can be considered. If they're being expelled for dangerous or abusive behavior, and they continue their dangerous or abusive behavior in that subsequent period, that can be addressed during the hearing.


You threatened to do A, B, and C bodily harm to a teller, and then two weeks later you did the same thing because it's the same teller and in the same building.


We've had a fair hearing. The member has a chance to be heard. The board of directors has to take a vote on the expulsion. On the timing, the NCUA's final rule says, "This has to be held in a timely manner, but it's within 30 days of the hearing." It doesn't have to happen right that minute in front of the member, but you can't wait three months to have this vote. It should be held pretty soon after that hearing. Thirty days is the timing that is represented there.


The expulsion requires a 2/3 vote of a quorum of the board of directors. However many board members you have there, it's a 2/3 vote required to expel the member. If they do vote, then the credit union would prepare and send the notice of expulsion. As I noted before, that notice of expulsion should respond to any arguments made by the member during their hearing.


As we talked about before, there are no formal appeal rights. The board's vote is final on this. However, what the member can do is request a reinstatement of membership. Let's say some time goes by and the member writes in and they say, "I'd like to request for my membership to be reinstated." It's not an appeal of the decision. It's asking for a second look to be able to say reinstated as a member.


A couple of important things from the final rule is that the NCUA said, "A member is only entitled to one request for a reinstatement." They were considering saying, "Can you request one every 12 months or 18 months?" You get one shot at it. After that first one comes in, in theory, the member could continue to request reinstatement, but there's no obligation of the credit union to hold a vote to consider that reinstatement, so you get one shot at it.


WFC 125  | Member Expulsion
Member Expulsion: The NCUA said that a member is only entitled to one request for reinstatement.


It would be a vote of the board which would have to decide that it could not be delegated. Do I have that right?


There are three options here. The board can vote. It could be a vote done by the membership at a special meeting. If their request for reinstatement comes in within 90 days of the credit union's annual meeting, it can be a vote of the membership at the annual meeting. Most credit unions would probably opt to do this with the board of directors, but there are a couple of options here. You can call a special meeting of your membership to consider this, or if you're close to your annual meeting, you can do it as part of that.


I'm going to predict the board will do 100% of those.


You're accurate on that. The last thing on the vote is to reinstate would require a majority vote of the quorum of the board. It is a 2/3 vote to expel the member, but only a majority is required to reinstate them.


I like that. That's clever and consistent with ownership rights.


The last thing on reinstatement is there's no prescribed minimum time or maximum time. The member does not have to wait a certain amount of time before requesting reinstatement. There's no maximum time. They could come back many years later and request reinstatement. There's no statute of limitations or anything like that.


The last thing on reinstatement is there's no prescribed minimum time or maximum time.

That's a good rule. That's a good structure as well. I'm guessing the answer is no to this, but let's say I get expelled and I'm in the credit union in Florida. I moved somewhere else. I end up coming back fifteen years later and I apply to be a member. I don't ask for reinstatement. I just walk in and say, "Here's my driver's license. I live in Tampa. Your field of membership is Tampa. I'd like to become a member of the credit union." The credit union takes me in without the proper application being done on my part. 1 year later, 2 years later, or 3 years later, the internal audit department goes, "Mark Treichel was expelled. Somehow he got back in here." Did they describe what might happen in that scenario?


They did not cover anything like that. What they did say is that you're they did address record-keeping requirements, that you do have to keep these records for six years. In your situation, it's theoretically possible that any records of this could be long gone. That'd be an interesting situation. I'm not sure how a credit union would handle that, but the NCUA did not address anything like that in the final rule. I wouldn't put it past that happening.


It's going to happen more than a reapplication will happen. Now that I'm thinking about it, that's my prediction. Maybe what NCUA would say is, "You need to expel them again and go through the whole process because you, as a credit union, screwed up. You're the gatekeeper. You let them in. You can't close the account without it." Maybe that's a good legal opinion that I can ask n NCUA for.


The first thing that came to mind was the membership agreement. The credit union would probably be scouring their membership agreement to see if there are any terms that were violated by the member not disclosing that they had been previously expelled. If they deem that to be a substantial violation of the membership agreement that could be grounds for re-expulsion.


There'd be a lot of credit unions that are going to want to do this, because like you said, everybody can think of that scenario where the teller or the board member was threatened or the CEO was followed home. Pick a scenario most credit unions have probably dealt with. There's going to be a lot of activity in this. If a credit union wants to do this, what would they need to do first as far as the bylaws policies, getting it approved by their board, etc.? How would you recommend a credit union proceed if they like what they see here?


The first is that this final rule is an amendment to the standard bylaws. In the bylaws, there exists Article 14 Expulsion and Withdrawal. It lays out two ways in which a member can be expelled. The main way is through calling a special meeting of the membership and having them vote. Everything we're talking about now adds to that Article 14, and it adds this third method.


The first thing that a credit union should do would be to look at updating its bylaws to include this new language. This is a good practice. Anytime there's any bylaw amendment, most credit unions want to keep their bylaws consistent with the standard version as it's being updated. The first thing that they should look into is how to update their bylaws to include this new language.


The first thing that a credit union should do is to look at updating their bylaws to include this new language.

The second thing I would recommend is to look at it from a policies and procedures standpoint. Everything we've talked about now, a lot of the common themes that we've heard from section to section is that the NCUA board gave federal credit unions a lot of discretion as to how to handle these situations. The credit union is going to want to have appropriate policies and procedures saying, "This is how we do this here. This is what our hearings are going to look like and how we conduct them. This is what our notices are going to say. This is the committee of people who are going to make this determination. Does the member's behavior qualify for expulsion?"


The credit union is going to want to have appropriate policies and procedures saying, “Hey, this is how we do this here. This is what our hearings are going to look like, and how we conduct them. This is what our notices are going to say.”

You want to have all those actual procedure standpoints well documented. As you said earlier, that one-word change in the NCUA board meeting from Chairman Harper said that the NCUA will be looking at this. You want to make sure you're buttoned up from the policies and procedures standpoint, not just for your examiners, but in case the member files an NCUA complaint. The final rule also addresses that they can exercise a private right of action, taking legal action against the credit union. You want to make sure your documentation is consistent and it's going to treat everybody fairly.


Those are the first two things that I would do. The bylaw amendment, and then look at your policies and procedures. Credit unions may already have a policy for something like a limitation of services policy. You want to make sure that any new policies are consistent with that and that it works as the whole package where it's saying, "This is what we do to limit services if someone writes their pin on the back of the debit card or anything like that. When it rises to a certain level, we now move over here to this member expulsion policy." You're making sure that your policies and procedures are consistent with anything that you might already have. Those would be the definite first two things that I would do.


The more I talk to you about this rule, the more I like this rule. NCUA did a really good job of doing this. You've done a better job explaining it to me. I liked it when I first heard it, but the devil's in the details. You know the details and I'm liking it even more now. I'm going to give NCUA an A. I'm going to give you an A-plus for being able to explain how well NCUA structured this. It gives credit unions a lot of opportunities for much-needed authority, in my opinion. Is there a question that perhaps I should have asked you that I did not ask that you'd like to talk about here as we wrap up?


I don't think so. We covered it well. The last thing that I thought was missing that I was surprised about was the request for reinstatement. The board did not talk about how that needs to be communicated to the member. They covered every other notice that was required, every communication from start to finish, and then left that out at the end. A letter explaining the result of the reinstatement vote is how I would go there. It's a very complicated rule. There are a lot of notices required, and that's all the more important reason for credit unions to have good policies and procedures on this.


I love quotes, and you just reminded me of one of my favorites. Confucius said, "It's a simple task to make things complex and a complex task to make them simple." You did that. You made this simple in my mind. The way you walked through it made it simple. This is going to be very valuable for credit unions. JT, I want to thank you. Before I do that, if someone is tuning in and they're either in Virginia or thinking about traveling to Virginia and they want to chat with you about this across the country, how would someone reach you if they had a question relative to this?


First of all, everyone should come to Virginia. It's a great state. Vacul.org is the league's website. You can reach me by email at JBlau@Vacul.org. Finally, on Vacul.org, we have a compliance blog. It's called the Regular Blog. We're doing a four-part breakdown of this member expulsion rule. A lot of things we talked about today. If you want to see it broken down, that's a great resource for us as well. You can find that on our website.


Fantastic. JT, I want to thank you for reaching out and being available to explain this rule so well. Thanks so much.


Thanks, Mark. I enjoyed our conversation.


You got it. Readers, I want to thank you for tuning in. I hope you'll tune in again soon.



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About JT Blau

JT Blau serves as Chief Advocacy Officer for the Virginia Credit Union League, leading the League’s advocacy work at the state and federal levels. He also oversees the League’s regulatory compliance resources and advocates for credit unions by engaging with both state and federal regulators. He joined the League in June of 2022 after seven years at Call Federal Credit Union in Richmond, VA, where he oversaw compliance, HR, BSA, and other areas as VP of Risk Management. JT received a M.B.A. from the University of Richmond in 2013, a J.D. from the University of Richmond in 2011, and a B.A. in Government from the College of William & Mary in 2008.


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