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NCUA reveals CEOs for conserved corporate CUs

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ALEXANDRIA, Va. (9/29/10)--The new leaders of recently conserved Southwest Corporate FCU, Members United Corporate FCU and Constitution Corporate FCU were revealed by the National Credit Union Administration (NCUA) on Tuesday. The NCUA has tapped former Genisys CU President/CEO Dianne Addington to manage the operations of Southwest. Addington has a total of 37 years of credit union experience, and spent 22 years with Genisys. Charles Furbee will take temporary control of Members United. While the NCUA’s release did not indicate that Furbee had any prior credit union industry experience, Furbee has served 27 years with the Federal Reserve. The NCUA has elected to pursue a purchase and assumption action or a merger for Wallingford, Conn.’s Constitution Corporate. William White, who previously served as vice president of Constitution Corporate, will take on the role of CEO for the time being. The corporate credit unions were taken into conservatorship on Friday, in a move that gave the NCUA control over 98% of the legacy assets held by all corporate credit unions. The NCUA's plan for these legacy assets, which are made up primarily of private label, residential mortgage-backed securities, is to isolate and fund $50 billion of the assets. The assets will then be reissued as NCUA Guaranteed Notes (NGN), which will then be sold on the open market. (See related stories: NCUA acts on Corp. CUs, legacy assets, NCUA reveals new corporate CU rule (9/27/10). For the NCUA release, use the resource link.

Inside Washington (09/28/2010)

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* WASHINGTON (9/29/10)--Minnesota credit union representatives recently met with lawmakers and industry officials during Minnesota’s annual Hike the Hill on Sept. 21-23 in Washington, D.C., said the Minnesota Credit Union Network (MnCUN). Attendees discussed regulatory and legislative concerns, and interchange with federal officials, National Credit Union Association (NCUA) Chairman Debbie Matz and Board Member Michael Fryzel. Credit union representatives visited the offices of Sens. Al Franken (D-Minn.) and Amy Klobuchar (D-Minn.) and U.S. Reps. Erik Paulsen (R-3rd District), Betty McCollum (D-4th District) and Colin Peterson (D-7th District). They also met with the staff of Reps. Tim Walz (D-1st District), John Kline (R-2nd District), Keith Ellison (D-5th District), Michele Bachmann (R-6th District) and Jim Oberstar (D-8th District). “Hike the Hill provided us with the opportunity to meet with regulators and legislators and discuss solutions to the issues affecting Minnesota credit unions and their members,” said Mara Humphrey, MnCUN vice president of governmental affairs. “This annual trip to the nation’s capital enables us to continue building and strengthening our relationships with lawmakers and federal officials.” Pictured are credit union representatives with Klobuchar (right). (Photo provided by the Minnesota Credit Union Network) ...

Cheney battles notion of CU bailout on Fox News

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WASHINGTON (9/29/10)--Credit Union National Association (CUNA) President/CEO Bill Cheney took to the airwaves to correct the misperception that credit unions are being “bailed out” by the National Credit Union Administration’s (NCUA) recently released corporate credit union and legacy asset plans. Cheney appeared alongside host Gerri Willis, The Wall St. Journal’s Mark Maremont, and analyst Bert Ely on Fox Business Channel’s The Willis Report.
CUNA President/CEO Bill Cheney appeared on Fox Business Channel on Monday to correct credit union 'bailout' claims and discuss the superior rates and service that credit unions offer to both current and potential members.
Cheney said that the notion of a bailout for credit unions was incorrect, noting that credit unions, not taxpayers, are bearing the cost of corporate credit union restructuring. Retail credit unions “will have to bear the cost over a 10 year period, but already have been paying the cost for a year and a half," Cheney added. Maremont backed up this statement. Referencing a prior appearance by Cheney, Willis asked if the $7 billion in savings that consumers could realize thanks to the lower rates and fees charged by credit unions would continue while retail credit unions are repaying the cost of dealing with the corporate situation. Cheney reiterated that credit unions already have been paying the costs and still have delivered the same level of savings to consumers. “As not for profit financial institutions, credit unions don’t have to return dividends to shareholders. The institutions are managed in the best interest of their members. They still pay the highest rates on deposits and the lowest rates on loans.” Cheney added. CUNA has released a comprehensive summary of the NCUA's recent corporate credit union actions and the release of its legacy asset plan. CUNA continues to analyze the impact that these rule changes and the asset plan will have on credit union practices. For the CUNA summary, use the resource link.

CUNA white paper CU alternative capital a top priority

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WASHINGTON (9/29/10)--The Credit Union National Association (CUNA) has developed a comprehensive white paper on capital reform for credit unions, a topic whose importance has only increased by the nation’s recent years of economic upheaval and the current focus on Basel III proposed international capital standards. “Reduced capital ratios at credit unions, strong headwinds against net income, and an interest by policymakers in increased capital at most types of financial institutions all point to the heightened need for alternate capital for credit unions,” the detailed report notes in its introductory paragraphs. It goes on, “Without access to additional forms of capital, many credit unions will be forced to curtail the growth of member service and burden members with higher loan rates and fees and lower dividend rates for years to come.” CUNA's Governmental Affairs Committee this week accepted the report and identified alternative capital as one of credit unions’ top legislative issues in the coming Congress. A credit union’s only source of capital is retained earnings. It is CUNA’s longstanding policy to support the authority of credit unions to build additional capital, either from members or nonmembers, in a way that does not dilute the cooperative ownership and governance structure of credit unions. This additional capital should be subordinated to credit unions’ share insurance funds, so that credit unions have the financial base to offer member services and adjust to fluctuating economic conditions, according to CUNA. Use the resource link to access the white paper recommendations, as well as its evaluations of the current state of credit union capital-to-asset ratios.

FHFA Composite mortgage rate drops in August

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WASHINGTON (9/29/10)—The Federal Housing Finance Agency (FHFA) on Tuesday reported an average national contract mortgage rate of 4.65%. The rate, which is made up of the rates charged for mortgages that were closed during August, is 0.13% lower than the rate recorded in July. The FHFA’s mortgage survey reflects loans that were closed during the last week of August. “The reported rates depict market conditions prevailing in mid- to late-July,” the FHFA added. The FHFA reported an average 3-year mortgage rate of 4.70% and an average 15-year rate of 4.46% during the same month. Both rates decreased significantly from the rates reported in the previous month. The contract rate on the composite of both fixed- and adjustable-rate mortgages was 4.63%, while the effective interest rate was 4.74%. The effective interest rate “reflects the amortization of initial fees and charges,” according to the FHFA. For the full FHFA release, use the resource link.

Legacy asset plan covered in NCUA DVD

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ALEXANDRIA, Va. (9/29/10)—The coming resolution of the corporate credit union legacy asset situation is covered in the most recent National Credit Union Administration (NCUA) corporate video presentation. The video presentation “provides the plan developed to resolve the legacy assets held by the largest corporate credit unions,” the NCUA said. The legacy asset plan "involves isolating the legacy assets to prevent the need to sell them at severely distressed prices; securitizing them and giving them a U.S. government guarantee; and then selling them to investors on the open market," the NCUA said in a release. The video presentation is the fourth and final presentation in the series. Previous video presentations addressed the history and services of the corporates, corporate credit union investments and issues associated with those investments, and the NCUA’s efforts to deal with the problems caused by those investments, respectively. The NCUA said that the four video presentations “were produced to provide credit unions a thorough understanding of the background and prevailing situation concerning the nation’s corporate credit union system.” The NCUA late last week issued a final rule on the corporate credit union system and introduced its comprehensive plan for dealing with the legacy assets held by the corporates. (See related stories: NCUA acts on Corp. CUs, legacy assets, NCUA reveals new corporate CU rule (9/27/10). For the most recent and past NCUA video presentations, use the resource link.