WASHINGTON-Too few credit union executives know what is in NCUA's proposed corporate CU rule changes, so Department of Commerce FCU CEO Evan Clark is trying to start the conversation.
Clark is using his Twitter profile to deliver a "play by play" account of what is in the 253-page proposal along with his personal opinions of the changes. For the last month, Clark has spent his 12-minute daily commute reading the entire proposed rule and, now about halfway through, has a mixed reaction to the regulator's plan. While he lauds NCUA for its capital reforms and leverage limitations, Clark believes there is too much emphasis on corporates' net economic value, and has a major bone to pick over the lack of focus on credit risk, which he sees as the chief cause of the corporate meltdown.
"What I expected from the regs was to address credit risk and instead what they are doing is relying on the credit rating agencies," he said. "Here we are at the end of the day looking at losses north of $16 billion at WesCorp and U.S. Central, and we're using the credit rating agencies as the number one way to rate these bonds again. What they should be doing is taking the underlying collateral and evaluating it loan by loan. In my opinion what they need to do is address credit risk and they have done an extremely poor job here."
Clark said he is somewhat incredulous that NCUA would choose a solid bond firm like PIMCO to determine the likely losses at WesCorp and U.S. Central, before then turning right around and relying on the same agencies that stamped AAA ratings on the securities that led to the those corporates' demise. He is also equally disturbed that he has heard very little from is fellow natural-person CU CEOs on the rule change or the corporate system in general except to join in the chorus of praising NCUA for addressing the problem.
"I find it amusing that so many credit unions are asking if they are going get their money back," he said, continuing that paid-in capital, depleted member capital shares and assessments are gone forever, "and forever is a long, long time."
"I want people to participate in this conversation," Clark said, noting that Dept. of Commerce FCU is sharing the pain, as it will be paying $780,000 in corporate assessments. "Don't you think that's worth a few minutes of my time to read through this stuff?"
