WASHINGTON (2/23/10)--The Credit Union National Association's (CUNA) Corporate Credit Union Task Force has weighed in on the status of the corporate credit union system and has proposed a series of dramatic changes to bolster the future viability of the corporate credit union system. A key principle behind the work of the task force was holding the interests of natural person credit unions "above all other,” and the task force report noted that risks related to the delivery of settlement, payment, and liquidity services must be well managed. CUNA’s Board has accepted the report and recommendations of the Task Force. The Task Force is comprised of nationwide credit union leaders, including Vystar CU CEO Terry West, Teachers FCU CEO Bob Allen, Suncoast Schools FCU CEO Tom Dorety, Tennessee CU League CEO Tom Gaines, Tropical Financial CU CEO Rich Helber, GECU CEO Harriet May, Georgia CU League president Mike Mercer, Allied CU CEO Frank Michael, and Virginia CU CEO Jane Watkins. CUNA Chairman and Deseret First CU CEO Kris Mecham took part as well. One of the task force’s main premises is that credit unions are unwilling to capitalize corporate credit unions under the current corporate business model, and, under the task force's proposal, both the amount of capital required of credit unions and the risks to that capital would be limited. An essential feature of that model is for corporates to hold much smaller balances sheets than they have in the past. While the task force agreed that the central elements of the National Credit Union Administration’s (NCUA) proposed corporate changes would be consistent with that sort of model, the task force believes that the proposal does overreach in some areas, and particularly called on the NCUA to address issues regarding corporate governance, derivatives and legacy assets. The NCUA proposal, which was released late last year, would adjust the current corporate capital requirements, impose new investment concentration limits, prevent corporate credit unions from investing in certain kinds of investments, and impose new restrictions on corporate credit union board membership and compensation. The task force has recommended a new model to serve natural person credit unions that would continue to provide payment and settlement services and act as an agent to provide investment and liquidity services to credit unions rather than providing those services on the corporates’ balance sheets. All of these services could be provided through an individual entity, subsidiaries, or vendors. The task force proposal noted that many credit unions and groups of credit unions are examining how they should respond to the need for change in the corporate system. Many corporate credit unions are also investigating new models and have weighed in on the NCUA's proposed changes to the corporate system. A particular concern raised by the task force is the need for a smooth and managed transition from the current system to the new, evolving system. The task force maintains that credit unions need to be assured that they will continue to have reliable access to the services they have received from corporates up until now. While the task force has not met directly with the NCUA administration on these issues, there have been some discussions, and a comment letter, which will be based on the corporate task force report, is pending.