ALEXANDRIA, Va (3/24/09)—A special closed meeting has been called for Thursday morning by the National Credit Union Administration (NCUA)to look at possible plans to spread out the cost to natural person credit unions of the agency's corporate credit union stabilization efforts. The Credit Union National Association (CUNA) has been strongly advocating such action. An agenda states matters to be considered are:
* Consideration of supervisory activities. Closed pursuant to Exemptions (9)(A)(ii) and (B); and * Consideration of Proposed Legislation. Closed pursuant to Exemptions (9)(A)(ii) and (B).
The agency made clear that the items address corporate credit unions and actions taken to stabilize the liquidity in the corporate system. CUNA, through its Corporate CU Task Force, has been exploring options to mitigate the cost to natural person credit unions of the NCUA’s recent actions regarding the corporates. CUNA staff also has been pressing this point with the agency, as recently as at a meeting yesterday morning that CUNA initiated with NCUA Executive Director David Marquis, Examination and Insurance Director Melinda Love, and Central Liquidity Facility President Owen Cole. At that meeting CUNA General Counsel Eric Richard, Deputy General Counsel Mary Dunn and Chief Economist Bill Hampel urged the NCUA to go to Congress immediately to seek assistance in mitigating the costs of its action to credit unions by spreading out the costs over several years. Senior regulatory staff of the National Association of Federal Credit Unions also were in attendance. The agency also indicated it plans to approach the U.S. Treasury Department to see how credit unions may fit into the public-private asset acquisition plan announced yesterday by Treasury Secretary Timothy Geithner. (See "Inside Washington" for more details.) That is also in line with what CUNA has recommended to NCUA. On Friday, the agency announced it had places two of the corporates—U.S. Central FCU and Western Corporate FCU (Wescorp)—into conservatorship. Also, in January the NCUA announced a three-pronged initiative to bolster and enhance the liquidity positions of the corporates. The agency declared a premium assessment to restore the National Credit Union Share Insurance Fund (NCUSIF) equity ratio to 1.30%, and announced the premium would be collected in 2009. During a webinar on corporate credit union issues Monday, NCUA Executive Director David Marquis said the agency “remains committed” to finding a way to mitigate the costs. NCUA Chairman Michael Fryzel concurrently announced he had directed NCUA staff to explore two new avenues to augment NCUA’s Corporate Stabilization efforts. First, Fryzel said, the NCUA has held preliminary discussions with federal lawmakers regarding the creation of a “corporate Stabilization mechanism”, as an adjunct to the National Credit Union Share Insurance Fund (NCUSIF). The new mechanism would replenish the NCUSIF through an arrangement with the U.S. Treasury Department, while providing additional flexibility for credit unions to make their required contributions over a period of time, Fryzel said. Details of the proposal will be available pending the Board’s review and decision at Thursday’s closed meeting. The second NCUA action is to evaluate the latest Treasury initiative to deal with troubled assets—the program announced Monday. The new ‘Public-Private Investment Program,’ Fryzel said, “appears to hold some promise for corporate credit union holdings.”