WASHINGTON (2/2/09)—Federal regulators must consider alternatives to their plan to assess a share insurance premium to help fund a stabilization plan for corporate credit unions, the Credit Union National Association (CUNA) urged. CUNA has expressed great concern that the National Credit Union Administration (NCUA) has not adequately explored a complete range of choices available or ways the plan could be less of a cost burden to credit unions already coping with tough economic conditions. (See related story: “CUNA concerned about costs of NCUA corporate plan.”) "We are fully aware of and troubled by the pressures that the agency's decision will have on credit unions,” said CUNA President/CEO Dan Mica. He added, “There is a wide range of alternatives that the agency can and must consider.” Among them, Mica identified:
* Allow credit unions to tap the U.S. Treasury Department’s TARP (Troubled Asset Relief Program), as soon as possible to deal with the corporate credit union liquidity emergency. This may require a statutory change and CUNA will sound out federal lawmakers to assess support: * Use the Central Liquidity Facility (CLF) to provide the funding. CUNA is currently analyzing CLF’s legal obligations and whether there may be opportunities for additional approaches or flexibility; * Permit credit unions to pay the assessment from reserves rather than running it through CUs’ balance sheets; and * Assess the premium in stages, rather than all at once. For example, split the premium into two or more equal parts, and allow credit unions to pay over time. CUNA is currently exploring the accounting and regulatory permissibilities of this approach.
Mica noted that the late 2009 time-frame that the agency has set for assessing a premium gives the NCUA, and credit unions, the opportunity to flesh out and choose among better alternatives.