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bNEWb CORPORATE CUs Corporate costs must be spread out Mica says
WASHINGTON (3/23/09, UPDATED 11:30 a.m. ET)—The Credit Union National Association (CUNA) called on the federal credit union regulator and lawmakers to mitigate the costs of its decision to place two corporate credit unions into conservatorship. CUNA President/CEO Dan Mica, hearing the late Friday announcement, first emphasized that the institutions at issue are corporates that provide wholesale services to CUs and not the natural person CUs that consumers use on a daily basis. He also stressed that overall the credit union system is safe and sound and credit unions well-managed. Savings at credit unions are insured up to $250,000 per account, and backed by the full faith and credit of the United States. “However,” Mica said directly after the announcement, “the impact of this action on everyday credit unions must be mitigated to ensure they will continue to serve their members safely, soundly and efficiently. “It is imperative for NCUA to devise a mechanism to spread the cost to credit unions of this conservatorship over a number of years, rather than in just one big bite. In fact, that is precisely what the FDIC is doing for banks. CUNA is continuing to work with the agency to bring this about.” In fact, working to mitigate costs to credit unions of the NCUA’s actions involving corporates has been a CUNA priority since that agency announced its Corporate Stabilization Plan (CSP) in January. That plan, to back up the liquidity needs of the corporate credit union system, is to be funded through a special premium assessment on natural person credit unions—who are the members of the corporates. CUNA and its Corporate Credit Union Task Force have been working with regulators as well as lawmakers to pursue options to spread out the cost of the premium beyond the one-year period currently projected. CUNA has also been in touch with key Congressional contacts this weekend to pursue a legislative remedy to mitigate the costs and is urging NCUA to work with Congress. U.S. Central has approximately $34 billion in assets and 26 retail corporate credit union members. WesCorp has $23 billion in assets and approximately 1,100 retail credit union members. The NCUA said in its announcement that it placed the two corporates into conservatorship to protect retail credit union deposits and the interest of the National Credit Union Share Insurance Fund (NCUSIF), as well as to remove any impediments to the agency’s ability to take appropriate mitigating actions that may be necessary. Service continues uninterrupted at both U.S. Central Corporate Federal Credit Union and WesCorp, and members are free to make deposits and access funds. Just after its announcement Friday regarding the corporates, the NCUA said it will host a webcast this Monday, March 23, to provide an update on its corporate credit union stabilization program. The two-hour session will include a discussion of recent events, as well as provide an update on National Credit Union Share Insurance Fund reserve liability. Registration is open until 1:45 p.m. (EST) on Monday. Use the resource link below to register.
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