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News Now

Washington
NCUA What corporate reform could look like
ALEXANDRIA, Va. (6/25/09)--The National Credit Union Administration (NCUA) will begin developing new rules for corporate credit unions this summer with a projected completion date of spring of 2010, moderator and Office of Corporate Credit Union official Scott Hunt said during the NCUA’s webinar on its corporate credit union stabilization plan. During the webinar, Hunt said that the NCUA will lay out a potential framework for corporate credit unions, and those corporate credit unions will then decide which services they would prefer to offer within that framework. Member credit unions could then decide which corporate credit union they wish to support. The NCUA board should issue its proposed rules for corporates this fall, according to Hunt. Hunt said that he does not expect the NCUA to dictate the structure that corporate credit unions must take on. However, he added, the new NCUA rules could lead to some corporate credit union consolidations. Hunt noted that the "slow run" on corporate credit union shares has abated, as deposit patterns now look to be following seasonal norms. Cash assets have also increased, and the corporates are reestablishing external lines of liquidity. Western Corporate FCU (WesCorp), which reported $7.6 billion in losses for its 2008 fiscal year, has a capital deficit of $3.5 billion and had its independent audit completed on May 19th. The NCUA also reported that U.S. Central now has $960 million in capital and that a comprehensive audit of U.S. Central’s financial situation should be completed by July 10th. Addressing the liquidity of the corporates, Hunt said that both US Central FCU and WesCorp were in “stable but tenuous” condition. External lenders are also starting to lend to the corporates again, as that the NCUA’s recent actions have effectively stabilized the corporate credit union system. However, Hunt said, natural person credit unions still need to continue to invest in the corporate credit union system, as the NCUA could be forced to sell some or all of U.S. Central's and WesCorp’s mortgage-backed securities portfolios if those institutions do not have adequate funds available to hold those securities to maturity. The Credit Union National Association will soon provide an audio archive of the NCUA webinar.


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