As first step toward alternative capital, CUNA backs 'members only'

WASHINGTON (9/29/09)—While the Credit Union National Association (CUNA) continues to insist that alternative capital proposals should encompass many options in order to help as many credit unions as possible, the nation's largest credit union trade group has joined with the National Association of Federal Credit Unions (NAFCU) to push for "member-only alternative capital" at this time.

In a memo to NAFCU, CUNA maintained that credit unions must be allowed to determine for themselves, based on their needs and membership, whether that capital should come strictly from membership or other sources.

However, CUNA also has acknowledged that "the need of a number of credit unions for alternative capital is real and immediate."

CUNA General Counsel Eric Richard noted that, in the memo to the other trade group, CUNA suggested that legislative proposals on members-only alternative capital be modified to include a number of additional sources for credit unions, including:

  • Government assistance counted as capital, which he said could include "credit unions in California who continue to tell us that they want to apply for TARP assistance but are blocked by, among other things, the difficulty of making such assistance count as capital."

  • Credit unions helping credit unions with capital assistance, which Richard said could include credit unions from states unharmed by the real estate bust assisting credit unions in the "sand states" of California, Arizona, Nevada and Florida which were hard-hit by the real estate collapse;

  • CU sponsors and select employee groups (SEGs) providing capital as members of credit unions, which Richard pointed to as groups that have set out to make credit union access available to their employees as an employee benefit;

  • Exceptions for extenuating circumstances, which Richard said would exist in exigent circumstances to help prevent credit unions from going into costly conservatorship or liquidation, "like those credit unions in hard hit states like California and Florida which have experienced declining capital through no fault of their own and need the biggest lifeline they can obtain."

"CUNA believes it is imperative to do all that we can to meet the needs of credit unions in this issue," Richard said. "The modifications to suggested legislation proposals are aimed at doing precisely that. We look forward to working with NAFCU on these issues."

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