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NCUA Town Hall includes alt capital corporate CUs
WASHINGTON (10/1/09)—National Credit Union Administration (NCUA) Chairman Deborah Matz Wednesday stated that the agency is conducting a "post mortem" on what contributed to the problems in the corporate credit unions, including NCUA's role. The chairman made her remarks before an NCUA Town Hall meeting here, one
Click to view larger image CUNA's Dan Mica, left, and Mary Dunn, right, pose with NCUA Chairman Deborah Matz, who gave attendees substantial insight into the NCUA's future rulemaking and examination agenda. (CUNA Photo)
of three such meetings organized under the new chairman. Matz said the priority now, though is to "get through the crisis" period. She also stated that the agency is adding more personnel and providing additional training to staff. "We are getting to where we should have been and need to be to effectively examine credit unions," she said. She added the agency is going back to a 12-month examination cycles because the 18 month cycle has not served the system well. The town hall meeting was attended by 180 other credit union representatives, among them Credit Union National Association President/CEO Dan Mica and other CUNA officials. Matz acknowledged that 2010 and perhaps 2011 could still be difficult years for natural person credit unions, and said that the NCUA's examiners are currently scrutinizing credit unions' call reports. Many of the issues found by the examiners relate to loan participations and a general failure to conduct proper due diligence. NCUA board member Michael Fryzel, Office of Corporate Credit Union Director Scott Hunt, General Counsel Bob Fenner, and NCUA Deputy Executive Director Larry Fazio were also in attendance, and the NCUA officials discussed the financial condition of the corporate credit unions and NCUA's ongoing implementation of its efforts to address problems within the corporate system. While the NCUA has not yet released its comprehensive plan for corporate credit union governance, the NCUA representatives previewed some elements of the proposal. Key elements will include proposed new capital standards that call for a 4% leverage ratio, which will include retained earnings and paid-in capital from members. The proposal will also address over concentration of risks in mortgage-related securities and other asset-backed securities, and will also propose limits on the weighted life of assets, perhaps two years. The proposal will also recommend yearly disclosures of the total compensation packages of all senior staff members, and will prohibit so-called "golden parachutes." The proposal is expected to be issued for comment in November. During questions from the audience, CUNA Board Member Tom Dorety, of Suncoast Schools FCU in Tampa, Fla., raised the issue of the need for alternative capital for a number of credit unions. Matz said that she was open to a reasonable proposal that would allow cedi unions to have additional sources of capital. Board member Gig Hyland noted that a that a comprehensive white paper on allowing credit unions to raise alternative capital could be presented to the NCUA board before its previously expected deadline of December of 2009. Hyland is heading an NCUA resource group that is developing an alternative capital proposal to send to COngress. The NCUA will hold its final Town Hall meeting in San Diego, Calif. on Oct. 5.


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