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ACCU adds voice to call for transparency
WASHINGTON (3/31/09)--The Association of Corporate Credit Unions (ACCU) wrote recently that it is deeply concerned about the conservatorship actions the National Credit Union Administration took against two corporate credit unions and the “extreme degree of credit union capital depletion and overall system impact these actions dictate.” In a letter to NCUA Chairman Michael Fryzel, the ACCU added its voice to the call for more transparency with regard to how the agency arrived at its valuations of the securities analyzed. The information, ACCU Executive Director Brad Miller wrote, should include the average default and loss severities used in analysis so that the industry can see if the agency’s future assumptions are “reasonable and in line with the actual cash flow evidence of these securities.” “Also, we question the decision and timing to conserve U.S. Central and WesCorp given the movement on stimulus measures, the Treasury’s private-public asset purchase plan, proposed accounting rule changes, and other positive steps being taken to revive the economy that will improve the condition of corporate credit unions and the system as a whole,” Miller wrote. The NCUA announced March 20 that it had placed U.S. Central FCU, Lenexa, Kan., and Western Corporate FCU (WesCorp), San Dimas, Calif., into conservatorship. The Credit Union National Association (CUNA) and credit unions have been urging the NCUA to provide greater transparency regarding a report by Pacific Investment Management Company LLC (PIMCO) on the corporates. The PIMCO report was the basis, in part, of the NCUA's decision to place the two corporate credit unions into conservatorship. In addition to more seeking transparency, the ACCU letter also encouraged the NCUA to continue to pursue alternatives for spreading out the cost impact to credit unions. Miller wrote that his group would like to see further action to develop a mechanism that matches actual losses with insurance fund expenditures if and when they occur, instead of requiring credit unions to pre-fund projected expenditures based on security modeling assumptions that will continually change.


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