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CU System
Iowa league conference features Hyland Hampel
DES MOINES, Iowa (2/20/09)--National Credit Union Administration (NCUA) Board Member Gigi Hyland was the keynote speaker at the Iowa Credit Union League’s Legislative and Regulatory Issues Conference held Tuesday and Wednesday in Des Moines. Hyland told the 120 participants that the event was her first face-to-face appearance with credit unions since the NCUA’s Corporate Stabilization Program was announced.
Click to view larger image National Credit Union Administration (NCUA) Board Member Gigi Hyland and Keith Morton, NCUA regional director of Region IV, discuss NCUA's Corporate Stabilization Program at the Iowa Credit Union League's Legislative and Regulatory Issues Conference Tuesday and Wednesday in Des Moines. (Photos provided by the Iowa Credit Union League)
Click to view larger image Credit Union National Association Chief Economist Bill Hampel explains the macro economic crisis facing the country and how it impacts credit unions at the Iowa Credit Union League's Legislative and Regulatory Issues Conference earlier this week.
Hyland and C. Keith Morton, NCUA regional director of Region IV, answered questions and provided further detail on the accounting treatments of the NCUA assessment. She said NCUA considered a number of other options to stabilization, including doing nothing, conservatorship and Trouble Asset Relief Program (TARP) funding, and the NCUA Board concluded that stabilization was the best, most immediate and least costly option for credit unions. However, NCUA is still open to reviewing all feasible and legal alternatives, Hyland said. Hyland pointed out the strong capital position of the credit union industry and that its culture has always been to build capital and maintain a relatively high return on assets. She emphasized that credit unions have built their capital in good times so that they could withstand the bad. Now more than ever, credit unions should use their capital to weather the storm and to operate business as usual as much as possible, she said. This sentiment was shared by first day featured speaker, Bill Hampel, Credit Union National Association chief economist. He told credit unions, “You need to let the capital protect you in times like these. Use it as an umbrella when it rains, and right now it’s pouring.” In addition, Hampel reviewed the macro economic crisis facing the country and how it is impacting credit unions. NCUA's Morton said that the National Credit Union Share Insurance Fund (NCUSIF) was developed to aid in challenging times like these. “If you’re not going to use it now, when will you?” He also explained how credit unions need to account for the NCUA assessment on their books. In answering audience questions, Hyland and Morton said NCUA does not know at this time if another assessment will be needed down the road. It largely depends on the performance of the securities in which the corporate credit unions have invested. NCUA examiners will treat the assessment as an “extraordinary event that was out of your control,” Hyland told the group. Regarding NCUA's Advanced Notice of Proposed Rulemaking (ANPR) for the corporate system, Hyland encouraged credit unions to “tell the NCUA how the Corporate Credit Union System is working for you and what you need from it in the future.” She urged credit unions to continue to support corporates now more than ever and said, “Failure to do so would be catastrophic.” Another featured speaker was John Caladim, managing director of CU Investment Solutions, an affiliate of U.S. Central. Caladim explained what caused U.S. Central’s other-than-temporarily-impaired losses and the role the corporate played in NCUA's actions, but reiterated that this is not a corporate credit union or industry-specific issue. “We are talking about a systemic problem that is worldwide,” he said. Iowa Credit Union Division Examiner Supervisor Ann Mulcahy described a letter the division issued Feb. 16 to Iowa credit unions indicating that before credit unions pay dividends on shares and interest on depsosits, they should provide for "required reserves, accrued and unpaid expenses, and established loan and lease losses, and as long as the charges do not cause the credit unions' legal reserve to fall below the required Iowa statutory level and the net worth ratio to fall below the well capitalized category.” Additional conference topics included mortgage lending fraud, federal consumer lending, state legislative panel, CUNA legislative update, and collection issues facing Iowa. On Wednesday evening, more than 150 legislators and credit union representatives attended a legislative reception.


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