App Process Meant Money Left On Table
NEW YORK – The Treasury Department awarding $69.9 million in long-term loans to 48 community development credit unions marks the largest capital infusion in the history of CDCUs, noted Cliff Rosenthal, who added that money was left behind.
Announced last week, the loans can be counted as capital and are leftover funds from the Troubled Asset Relief Program. A total of $570 million was awarded to 84 community development financial institutions, with banks receiving most of the funding dollars.
Rosenthal, CEO of the National Federation of Community Development Credit Unions, said the award will help many small credit unions grow, expand services to members and battle ongoing assessments. “It is a cause for celebration,” Rosenthal said.
However, looking back, Rosenthal acknowledged that applying for the loan was very difficult for credit unions since many of the statutes guiding the Treasury program were designed with big banks in mind. “We wish there were more money that went to credit unions – there was money left on the table due to the regs and statutes. The very complexity deterred some credit unions, who withdrew from the process.”
Rosenthal said 111 credit unions submitted applications before the initial deadline and 85 CUs went through the approval process. He estimated that 60 credit union applications received NCUA approval and were forwarded to the Treasury with a positive recommendation.
Some credit unions withdrew due to cumbersome closing documents, according to Rosenthal. Others apparently were concerned with waivers they had to sign acknowledging their compensation, bonuses and severance could be modified or revoked. “The top 20 employees had to sign waivers,” said Rosenthal. “One credit union had 18 employees, and every employee down to part-time tellers had to sign this waiver, which is a little imposing if you read it and would probably give many of us pause.”