WASHINGTON (2/25/09)--The board of the National Federation of Community Development Credit Unions adopted resolutions supporting measures to sustain the credit union system, enhance the viability and capacity of low-income credit unions, and aid low-and moderate-income families hard hit by the economic crisis. The resolutions were made during a board meeting this week in Washington, D.C. "We are concerned about the consequences of reduced net worth and return on assets (ROA) that would necessarily result from the measures that the National Credit Union Administration (NCUA) has proposed," said federation President/CEO Cliff Rosenthal. To mitigate those effects, the federation is supporting these legislative and other proposals:
* Corporate credit unions should gain direct access to the Central Liquidity Facility for liquidity and capital; * Troubled Asset Relief Program (TARP) funds should be made available to the credit union movement; and * Share insurance premiums should be spread out over as long as eight years, on parity with other financial institutions.
"These actions will help all credit unions," Rosenthal said. "However, it is important to recognize that small and low-income credit unions are especially vulnerable during this crisis." Last year the pace of liquidations and mergers of low-income credit unions doubled and far exceeded that of the rest of the credit union industry. "If this trend continues," Rosenthal said, "the capacity our credit unions have painstakingly built up over the last 30 years will be dismantled, leaving many low-income communities with little or no access to affordable financial services." The federation expressed particular concern about the potential for a drop in net worth of credit unions resulting from the corporate stabilization measures. It is proposing that NCUA modify the policies of the Community Development Revolving Loan Fund (CDRLF) to enable it to make loans to low-income credit unions for secondary capital. Access to additional sources of secondary capital would help credit unions meet Prompt Corrective Action (PCA) capital standards, bring in additional deposits and expand lending in low-income communities, the federation said. "We are asking NCUA to take the necessary regulatory or policy steps to utilize the CDRLF for secondary capital loans," said Rosenthal, adding that the proposal would involve no additional taxpayer liabilities or expense.' The federation board also endorsed the "Helping Families Save Their Homes in Bankruptcy Act of 2009" (S. 61/H.R. 200). "Because this bill only applies to mortgages where foreclosure is imminent and where the borrower has requested a modification," Rosenthal said, "we believe it is a reasonable proposal."