WASHINGTON – A unified credit union view of the future of the corporate credit union system is the product of a joint task force appointed by the chairs of the Credit Union National Association (CUNA) and the National Association of Federal Credit Unions (NAFCU).

The task force today delivered its view in a report to the National Credit Union Administration (NCUA) Board. The purpose of the report is to maximize credit unions’ impact on the NCUA’s rulemaking process concerning corporate credit unions.

“The circumstances of the current corporate credit union system have had an enormous impact on the credit union industry,
and we want to make sure going forward that credit unions have as much input as possible on how to best enhance the system for the future,” said NAFCU Chair Brad Beal.

“We undertook this as a collaborative effort because we wanted to develop recommendations that were comprehensive and strategic. We strived to address the challenges of balancing risk and the needs of natural person and corporate credit unions in our recommendations,” said CUNA Chair Kris Mecham.

The task force’s detailed recommendations cover the major areas of the corporate credit union system: services, capital,
structure, corporate governance, NCUA oversight and insurance of shares and deposits in corporates.

The task force approached its mission based on issues raised by NCUA’s Advanced Notice of Proposed Rulemaking issued in January, as well as other issues that have risen since those comments were submitted.

The task force was guided by three specific principles:

• safeguard the interests of natural person credit unions (NPCUs), both those that choose
  to use a corporate and those that do not;
• develop a corporate credit union system structured so that the recent losses to NPCUs,
  both individually and systemically, will not reoccur;
• create a corporate system that credit unions will willingly capitalize and use, recognizing
  these two elements must be present:
  -- a business plan in which credit unions see sufficient value and
  -- a structure that credit unions perceive as sufficiently safe.

The task force is co-chaired by the chairs of NAFCU’s and CUNA’s Corporate Task Forces with support by staff members of the two credit union national trade groups, NAFCU and CUNA. The members of the task force included members from the Corporate Credit Union Task Forces of CUNA and NAFCU, representatives of the National Credit Union Roundtable, representatives of smaller credit unions and the Corporate Credit Union Stabilization Partnership.

The task force’s recommendations are offered as a comprehensive plan. The task force recognized that the suggestions being made represent a departure from the current corporate system. The proposed system implied by the task force’s suggestions represents a future corporate system that the task force believes that natural person credit unions would support and use.

Some of the key findings of the task force include:

• Services of corporates should be limited to a defined set, including payments and settlements,
  liquidity and short-term investments. Further, longer-term, on-balance sheet investments should not
  be offered by corporates.
• Contributed capital should be required for membership and service use by credit unions; corporates
  will have to present a sufficiently compelling business case covering both the value of services provided
  and strong risk control.
• With limits on risk-taking, competition among corporates will be driven by efficiency, placing a
  premium on economies of scale and thus creating substantial pressures for consolidation.
• Insurance coverage for natural-person credit union (NPCU) shares and deposits in corporate credit
  unions must be limited to the maximum coverage for personal deposits and shares in the NPCUs.
• NCUA oversight of corporates must be improved, with adequate qualified staff with special knowledge
  of the complex operations of corporate credit unions.
• Corporate board members must have sufficient expertise to govern their corporate consistent with the
  powers of the CCU.

The full report is here. For more information, contact:

NAFCU Task Force Chair
Mike Lussier, President/CEO
Webster First Federal Credit Union
(508) 671-5051; mlussier@websterfirst.com

CUNA Task Force Chair
Terry West, President/CEO
VyStar Credit Union
(904) 777-6000; westt@vystarcu.org

Patrick Keefe, CUNA Communications
(202) 508-6765; pkeefe@cuna.com

Patty Briotta, NAFCU Communications
(703) 842-2820; pbriotta@nafcu.org