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Washington
New insights from final corp CU town hall
WASHINGTON (2/5/10)—The National Credit Union Administration (NCUA) continued its frank discussions on corporate credit union issues Thursday and revealed that the agency hopes soon to work out its formal position on legacy assets. At its final live town hall session on corporate issues in Florida yesterday, NCUA Chairman Debbie Matz kept up her call to credit unions to comment on proposed changes to the corporate rules. Matz underscored the value to the agency of all credit union comment and specifically cited the agency’s anticipation of comments to be drafted under the auspices of the Credit Union National Association’s (CUNA’s) Corporate Credit Union Task Force, said VyStar CU President/CEO Terry West, who attended the meeting. West is chairman of the CUNA task force. The deadline for comments submitted directly to NCUA is March 9. CUNA has identified two areas of concern regarding legacy assets. First is the question: Can former capital holders, whose capital has been depleted, have their capital restored in the future if ultimate losses on the legacy assets turn out to be much less than expected. The second issue is whether, going forward, new capital depositors will be at risk if further losses occur on the legacy assets, that is, if losses turn out to be worse than expected. At a previous meeting in Dallas, Texas, NCUA staff said before a new rule is in place, the agency must find a way to wall off new capital from further losses if natural-person credit unions are to continue to capitalize the system—and that such credit union participation is crucial to an ongoing system. (News Now Jan. 25) At this week’s meeting, agency staff reiterated that the NCUA is working closely with the U.S. Treasury Department on this issue. Agency staff also said they anticipate the future looses for the corporates will aggregate between 80-100 basis points over a 5-7 year period. Although the meeting Thursday is the last live meeting offered by the NCUA, stakeholders have one last chance to participate in the discussions via an online session scheduled for Feb. 18. (See related story: Final chance for an NCUA session on corp CUs) Use the resource links below for more information on the NCUA corporate credit union restructuring plan.
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