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Matz NCUA looking at legal issues of legacy assets
ALEXANDRIA,Va. (11/17/09)—The topic of corporate credit union capital depletion remains a topic of internal and external discussions at the National Credit Union Administration (NCUA), said the agency chairman Monday. Debbie Matz, who heads the NCUA, issued a statement saying that each day since the NCUA’s Nov. 5 meeting on the issue of capital depletion, the agency leadership and staff has been carefully weighing the issues and considerations raised by stakeholders at that meeting. At that meeting Thursday, Credit Union National Association (CUNA) President/CEO Dan Mica urged the agency to allow a process that would leave the door open to future capital recoveries if the magnitude of losses at the corporate credit unions is not as great as the NCUA has estimated. In a follow-up letter to the NCUA, Mica added, “(T)he central issue is that it is unfair to require credit unions to write down their capital in these corporates on the basis of estimates of their future losses, with absolutely no possibility of future recovery should those estimates turn out to be inaccurate." Matz said in her Monday missive: “Any successful solution will hinge on whether or not current holders of depleted capital accounts can legally retain some form of rights to any future earnings on corporates’ ‘legacy assets.’ At this time, it appears unlikely that earnings or losses from legacy assets can be isolated or set aside in ongoing corporates. Nor can corporates’ depleted capital be frozen in a way that would preserve the integrity of their capital going forward.” “However,” Matz continued, “we are still exploring creative ideas to address legacy assets as well as to allow affected capital holders to benefit if confirmed losses are less than recognized losses. Any such alternative approach must be consistent with all legal and accounting requirements, and uphold the fundamental purpose of capital.” CUNA continues to work on solutions to the problem of capital depletion.


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