Federal regulations require members of credit union boards to avoid personal gains from their position, but directors of one of Hawaii’s largest credit unions are under deserved criticism for their actions. Members of other popular lending organizations should take it upon themselves to demand ethical conduct by their boards of directors.

At the Hawaii State Federal Credit Union, some directors have changed their ways somewhat after being flagged in annual inspections by the National Credit Union Administration, the credit union-financed federal agency that regulates credit unions, which are nonprofit cooperatives owned by their members.

In a statement to the Star-Advertiser’s Rob Perez, HSFCU spokeswoman Tricia Buskirk said that its board and management "are accountable to the members, regulators and the law."

As it should be, with or without a public spotlight.

The HSFCU board members agreed to reduce their benefits after receiving complaints from credit union members following the Star-Advertiser’s article last Sunday. They declined to change a policy of the credit union paying for a computer and other equipment for Internet access for each director so they can do business from home.

At the $1 billion HSFCU, its board members’ generous benefits package to themselves exceeded that for directors at the Virginia-based Navy Federal, the world’s largest credit union with 3.6 million members, 212 branches and assets of $44 billion.

Federal rules require that board members avoid any conflicts of interest involving themselves or immediate family members. They also are not allowed to benefit from what the 1934 Federal Credit Union Act calls "incidental powers," although that is not well-defined.

It took a regulatory report by the federal agency three years ago for Beverly Ing Lee, the Hawaii credit union board’s chairwoman, to stop using Classic Travel, which she owns, to book board members for credit union-related trips, of which there have been many, at rates higher than that often charged by the airlines directly.

On those trips, the credit union has paid what it calls "reasonable" expenses for directors’ spouses or companions making those trips. That’s generosity that overreaches into questionable territory.

HSFCU board members received free rooms from a Waikiki hotel in conjunction with the credit union’s annual membership meetings until an internal oversight group determined in 2008 that the freebies violated federal rules. Also, some directors were reimbursed for out-of-pocket expenses for monthly health insurance premiums.

Some of the credit union’s 75,000 members have a right to be angry about what they see as the board members’ lax policy toward conflicts of interest and are making moves to run against them in April elections. Certainly, that is one solid way for members to signal their discontent with entrenched, dubious ways of doing business. After all, it does come down to a matter of trust between the directors and the members whose money they are charged with handling.

HSFCU is the second-largest credit union in the state, with assets of nearly $1.2 billion, so the directors may reason that it has plenty to dip into on occasion. The larger the credit union, though, the more vigilant members should be for dippings into the pot.