If there is a silver lining to the devastation wrought by Hurricanes Katrina and Rita, it is the opportunity to rebuild-both in terms of the battered cities themselves and the credit unions that serve them. But one credit union executive suggests the movement, and particularly NCUA, is going about it the wrong way.
"I think NCUA should have taken every credit union [in the affected area] under conservatorship immediately and put in place a program of forbearance for every credit union down there," said Wendell "Bucky" Sebastian, CEO of GTE FCU, who formerly worked for NCUA.
Sebastian's own credit union has four branches in New Orleans (see related story, left), but it is his experience with the federal regulator that drives him to suggest there's a better way to address the double disaster that has befallen New Orleans and the Gulf Coast region.
"There's about $10 million in debt down there, and NCUA should have just told the credit unions to forgive it immediately instead of writing it off, because they're going to have to write most of it off anyway," he argued. "And you'd save a lot of people from jumping off bridges. The CUs are going to have a terrible time working all this out. They're going to spend a lot of time trying to collect loans that are uncollectible. What a monumental waste of time and energy. There are lots of creative things that could be done by NCUA, but if they continue to think routinely, they're never going to get there. Let's face it, this is not a routine situation."
Sebastian applauded the efforts across the credit union community that have contributed to the recovery efforts, but the problem is, he said, it is up to NCUA to do what no one else can.
"NCUA is the only entity that can force things to happen," he commented. "Look, when someone is in shock, the doctor has to think and act for them. Well, in the first days after the storm, credit unions were, for all intents and purposes, in shock. Board members and employees were scattered across the country, just like the membership. Some could not be found for days. They were in no position to act for themselves. Had NCUA put them all into conservatorship, that sends the right message, that we are going to conserve these credit unions, and we're going to think some things through for you, because right now, you can't."
And as one of the architects of the National CU Share Insurance Fund, Sebastian said this is exactly what that fund was created for in the first place. "What is the share insurance fund for if not for this," he asked. "The share insurance fund was created for a rainy day. Well, guess what? It rained like hell."
While some in the credit union community are very concerned that some credit unions in the affected areas will not be able to withstand the one-two punch that Mother Nature has thrown them, Sebastian said that shouldn't even be a concern at NCUA. "NCUA should do what is best for the movement, and doing what's best for the movement always means doing what is best for the members, not what's best for the organization," he suggested.
