CEO At Beleagured New Orleans CU Says NCUA Needs To Be Understanding

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ASI FCU CEO Audrey Cerise's letter to the NCUA Board and staff, which described the plight of her community development credit union that serves the poorest of the poor in beleaguered new Orleans, appears to be both a modern-day shot heard around the world and the best-kept credit union secret.

"We have had no response directly from NCUA," Cerise told The Credit Union Journal. "But we've had plenty of indirect response."

In a poignant letter that appeared on page 1 of the Sept. 19 issue of The Credit Union Journal, Cerise described how the credit union hadbeen "bloodlet" by its own members in the desperation in New Orleans following Hurricane Katrina. Cerise urged NCUA to be patient with the $208-million ASI and other credit unions that, in an attempt to serve their members, likely will take a major hit to capital when all is said and done.

But not only has Cerise not heard back from NCUA, a spokesperson for NCUA claimed not to know about the letter and asked The Credit Union Journal for a copy of it.

Yet Cerise has had clear indication that at least somebody at NCUA is well aware of that letter, and more than aware of the situation ASI is facing.

"Within a week, someone from Special Actions was wanting to see me. Clearly, NCUA had already decided we were in trouble," she said, referrring to the special examinations arm of NCUA that is dispatched to troubled CUs. "I had just worked a 14-hour day trying to help my members, many of whom are in real distress, because our members were the people left behind. We serve the people no one else wants to. So, I've just worked all day, and I don't even know if I have a home to go back to, and the guy from Special Actions wants to know what our capital was before the storm. I told him it was at 9%, and he says, 'And how do you think this will affect that?' I just looked at him and said, 'Well, it's not going to improve it.'"

Frustration, heartbreak and irony are rich in Cerise's voice as she explains what she wants from NCUA, what she has gotten, and how the credit union has taken a beating from its own members.

"What I want from NCUA is some forebearance, patience and understanding as we work to rebuild our capital," she said. "These were desperate people resorting to desperate means in desperate times, and our members have taken us to the cleaners. We knew what was going to happen, but your choice is to either penalize the good, honest people or leave the door open for those who are dishonest. We left the door open, and the dishonest not only took advantage of it, but they made sure to tell all their dishonest brothers and sisters, too. The word went out in the shelters: 'if you've got an ASI card, you can get $300 a day for free. We could have shut down our ATMs before the storm, but that would have meant failing to serve the good, honest members who needed our help."

While ASI is looking for forbearance, patience and understanding from NCUA, that's not exactly what Cerise has gotten.

"Well, they said they were supportive," she chuckled. "Let me put it this way: Special Actions was on my doorstep within a week asking about our capital. Does that sound patient to you?"

And as for the letter the agency spokesperson said he hadn't seen-the same letter that was published in The Credit Union Journal and was being circulated on a variety of credit union listservs, Cerise said it was clear someone at NCUA certainly knew about it. "NCUA may say it doesn't know about this letter, but the Special Actions people sure did. They were very upset that we sent that letter out.

"This is something that if NCUA allows it, we'll survive. We're a strong credit union, and we're going to be OK. But NCUA is going to have to just sit back for a while and let us work this out. It would be easy to just come in and say, 'Your capital isn't where it needs to be and the hell with you.' Let's just say I don't expect a lot of forbearance at this point. I'm disappointed that I haven't heard [any response to the letter] from NCUA. Debbie Matz would call, but she's already gone.

"You know, NCUA is always very happy to show how credit unions are serving the underserved, and they're always happy to trot out ASI as an example," Cerise continued. "We were at practically every PALS conference as the shining example of serving the underserved. Well let me tell you something. I truly believe in serving the underserved, that this is what credit unions were meant to do. But if you're going to serve the underserved, then you need to realize that there is additional risk, and when something like this happens, you had better step up to the plate."

Serving low-income people, Cerise said, can be difficult under the best of circumstances-and an absolute nightmare under the worst.

"You need to understand who are members are. The people trapped in the Superdome? Those are our members. The same people who were standing on buildings and shooting at people? Those are our members," she related. "I'm told that one of our buildings actually came through the hurricane just fine-then the looters hit it. They burned down buildings. Those are our members."

Overdrawn Accounts

Yet, she continues, "The people who are overdrawn by a couple hundred dollars, we're not going after them. I gave one man $60 out of my pocket because he was hungry, he needed to get gas for his car, which is where they were living, and his kids hadn't eaten. I had no other way to help him. I have one man who owes us $6,800 and he swears he's going to pay us back-using his Social Security." she said. "Now, the people who were overdrawn by $6,000. They knew they didn't have $6,000, and if they were feeding people, I sure hope they fed a whole lot of people. We are gathering police reports now."

ASI has been able to reprogram its ATMs to stanch the bleeding and is embarking on a massive collections effort to recoup some losses, but as Cerise put it, she's not holding her breath.

"I drove through the city [Tuesday], and it really does look like a bomb went off. I've never seen anything like it. I don't know how they're going to come back, there's nothing to come back to, nothing," she described. " There are no jobs to come back to and no homes. Those people with car loans drove off in their cars, and there's no way they're coming back, and we're never going to find them again."

If Cerise sounds just a little bit downtrodden, it's because like all of New Orleans, she is, at least for now.

"I've dedicated 37 years of my life to people who had no resources, no options, and then this happens," she said. "That's where my heart was, and now my heart is broken. But it will mend."

What helps, she said, is the support she's gotten from other credit unions and organizations-sometimes where she least expected it.

"I can't say enough about the Louisiana Credit Union League," she said. "ASI is not a member of the league. In fact, we've been at odds for years. But they really stepped up to the plate. They have been a tremendous help in spite of the fact that we aren't part of the league and haven't been for quite some time."

The National Federation of CDCUs has also bent over backwards to help, as has Louisiana DOW FCU, she said. First Advantage CU, which is headed up by Cerise's nephew, Casey Duplantier, has also reached out to ASI.

"The hurricane hit on my 67th birthday, so I'm not going to be at this for a whole lot longer. I'm going to get this credit union back in shape, and then I'm out of here, so I'm not worried about me," she said. "But I'm worried for the younger people here, the next generation of leaders. I was always the old one who had the passion and kept everyone else passionate about this mission of ours."

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