Credit Union Structure, Governance, and Regulatory Framework
Credit unions are not-for-profit, member-owned cooperatives organized under either federal law (the Federal Credit Union Act, administered by the NCUA) or state law (supervised by a state regulator, with NCUA as insurer and sometimes dual examiner). Understanding the field of membership is essential: a charter defines who may join (occupational, associational, geographic, or a community charter). Membership is a prerequisite to service, and each member holds one vote regardless of share balance - a classic exam trap is confusing voting rights with equity contribution.
The board of directors is elected by the membership, sets policy, and hires a CEO/manager; the board does not run day-to-day operations. The supervisory committee is a member-elected body with a distinct statutory role: it must perform or arrange the annual audit, verify member accounts, and act on member complaints. Questions often blur the supervisory committee with the board's audit committee - for federal credit unions the supervisory committee is the legally mandated body. The credit committee (where used) acts on loan applications, though many charters delegate lending authority to management.
Other named roles: the treasurer (often a board officer responsible for financial records oversight), and the NCUA as prudential regulator and share insurer through the National Credit Union Share Insurance Fund. State-chartered credit unions may face dual supervision. Understand that conversions, mergers, and charter changes require membership votes and regulatory approval.
Worked rule of thumb: If a question asks who is responsible for the annual audit and member account verification, answer the supervisory committee - not the board, not the CEO, and not an outside CPA alone.
Watch for traps: confusing the NCUA with the FDIC; assuming directors are paid employees; and assuming members' votes scale with deposits.