CUs urged: Contact NCUA before corporate action today
WASHINGTON (3/26/09)—Credit unions are asked to urge each National Credit Union Administration (NCUA) board member to provide greater transparency regarding a report by Pacific Investment Management Company LLC (PIMCO) on corporate credit unions (CCU).
In a credit union action alert launched Wednesday, the Credit Union National Association (CUNA) also encouraged credit unions to push the NCUA to approve a mechanism to spread out the costs associated with recent agency actions addressing the corporate system.
The NCUA has scheduled a special closed meeting for today that will address CCU issues. The agency is expected to review proposals that will allow the insurance costs to federally insured credit unions associated with NCUA's actions regarding corporate credit unions to be spread out over time.
The PIMCO report was the basis, in part, of the NCUA's most recent action –to conserve two corporate credit unions, U.S. Central FCU, Lenexa, Kan., and Western Corporate FCU (WesCorp), San Dimas, Calif. PIMCO is a PIMCO is a leading global investment management firm.
CUNA has requested more information on the PIMCO analysis, but urges credit unions to join in the demand for more information.
CUNA said it remains extremely concerned about the impact on credit unions of NCUA's decision Friday to place the two CCus into conservatorship, an action that brings a "huge cost" for the entire credit union system.
The NCUA projects these actions raise the initial estimate of the corporate share guarantees from $4.7 billion to $5.9 billion. They likely will also impose additional impairment costs for credit union capital in WesCorp, U.S. Central, and perhaps other corporates.
"Email each of the NCUA Board Members TODAY and urge them to approve a mechanism to spread out the costs and direct their staff to provide much more information to the credit union system from the PIMCO report," CUNA urged.
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