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Southwest Corporate launches site to assist in comments
DALLAS (2/23/10)--Southwest Corporate has launched a resource site on its website to assist and encourage credit unions to write comment letters about the National Credit Union Administration's (NCUA) Proposed Rule for Corporate Credit Unions (Reg. 704). The site contains links to the proposed rule, a copy of Southwest Corporate's comment letter, an executive summary of the letter and general tips to aid credit unions in offering their own comments. NCUA's deadline for comments is March 9. In a letter to Southwest Corporate's member credit unions last week, CEO John Cassidy urged interested credit unions to write comment letters asking NCUA to revise sections of its proposed rule. "Southwest Corporate believes its ability to continue to serve its member credit unions will be severely curtailed unless certain provisions of the proposal are modified," Cassidy said. In its comment letter to NCUA on Feb. 17, the corporate identified 14 issues that it said needed attention, including two key issues. The first is NCUA's proposed cash flow mismatch limitations. Under the proposal, cash flows of a corporate credit union's assets and liabilities would be so closely matched "that corporates would be unable to generate sufficient earnings, and the sustainability of any future corporate business model would be questionable," Cassidy said. "Unless this rule is modified, Southwest Corporate will not be able to comply with the retained earnings requirements that are also included in the proposal." The second issue relates to the transition period for corporates to meet the proposed rule's minimum risk-based capital requirements. It sets the effective date for two new risk-based capital requirements at one year after publication of Part 704 in final form. Southwest Corporate recommends the transition period be set at one year after the effective date of the publication of the revised Part 704 in its final form or one year after the implementation of a legacy asset solution--whichever comes later. "Such a transition period would provide all credit union industry participants with sufficient time to communicate, to implement a recapitalization plan, and to revise their respective business models," Cassidy noted. Southwest Corporate is also developing more Web-based resources to enable credit union leaders to explain to their members the background of corporate credit unions and the role they play in the cooperative credit union structure, said the corporate. For more information about the corporate's comment letter, use the resource link. The Credit Union National Association's (CUNA) Task Force released its report Monday at CUNA's Governmental Affairs Conference. (See RELATED STORY in News Now's Washington section, "CUNA task force calls for new corporate model.")
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