WASHINGTON (1/30/09, UPDATED 10:30 a.m. ET)—The Credit Union National Association (CUNA) said that is does not welcome federal regulators’ action to support corporate credit union liquidity by extracting a high price from credit unions, but does understand the need for the agency to act. CUNA, in a statement issued today, said the agency must consider other solutions to mitigate the costs on credit unions during these difficult economic times. The NCUA announced Wednesday it would:
* Guarantee uninsured shares at all corporate credit unions through February 2009, and establish a voluntary guarantee program for uninsured shares of all corporate credit unions through Dec. 31, 2010; * Issue a $1 billion capital note to U.S. Central Corporate FCU (U.S. Central); and * Declare a premium assessment to restore the National Credit Union Share Insurance Fund (NCUSIF) equity ratio to 1.30 percent. The premium will be collected in 2009.
CUNA said there is real concern about whether the agency adequately explored the complete range of choices available, and ways the plan could be less of a cost burden on credit unions already coping with tough economic conditions. “We are fully aware of and troubled by the pressures that the agency’s decision will have on credit unions. Our view is that other choices can and must be explored, immediately, to mitigate the impact on credit unions,” said CUNA President/CEO Dan Mica. “Based on what we know from both NCUA and the corporate network, the agency was compelled to act promptly to address growing demands on corporate liquidity and capital.” Mica said. The CUNA Corporate Task Force met all day Thursday and discussed with NCUA, natural person credit union and corporate experts concerns about NCUA’s actions. The group also began the process of identifying alternatives to recommend to NCUA. For the next weeks, CUNA will continue a dialog with the agency and urge it to consider other approaches to this challenge, Mica declared.