ONTARIO, Calif. (10/7/10)--A Corporate Realignment Task Force created by credit union leaders in Western states has agreed on several guiding principles for dealing with recent changes in the corporate credit union system. The task force released a position paper detailing the principles, according to the California and Nevada Credit Union Leagues. The principles recognize the need for:
* A system solution. Commercial and outside organizations may wish to provide credit union item-processing and payment-system services, but many credit union leaders have expressed an enduring system solution. “A financial institution connection is needed to provide collaborative settlement and related liquidity services,” the paper said. * Aggregation of volume, which will be needed to successfully replicate the essential services that natural-person credit unions are accustomed to receiving from their corporate credit unions because the cost of these services will no longer be subsidized by investment activity. “Given likely narrow margins, it is unlikely that a multitude of solutions will see much success; competitive pressure could result in predatory activity and eventually more painful consolidation,” the paper said. * A universal solution. “Many credit union leaders, including those at larger credit unions, have expressed their hope that a system solution will emerge that provides quality, affordable service for all types and sizes of credit unions. Our strength, both politically and operationally, lies in cooperation and system unity; it is important to provide logical, affordable service opportunities for smaller and mid-sized credit unions as well as larger ones; for modest organizations as well as complex ones,” the paper said.
The task force will work toward solutions reflecting the guiding principles and urges credit union leaders to consider supporting solutions with those elements, the leagues said. The Credit Union National Association has a Corporate Credit Union Task Force, and many leagues and associations have formed similar groups after the National Credit Union Administration announced it would be placing several corporate credit unions into conservatorship last month.