WASHINGTON-Credit unions can now pull back the curtain on the so-called "legacy assets" and gain a better understanding of the performance of securities once held by the five failed corporate credit unions.
Co-Ops For Change (www.coops4change.org) has posted spreadsheets that list all of the legacy asset securities by CUSIP number from the five corporates closed by NCUA in 2009-10: U.S. Central, WesCorp, Southwest Corporate, Members United and Constitution Corporate.
As conservator, NCUA now holds those securities, engendering a great deal of debate about their current value and future performance, with many in the industry alleging the agency has not been fully transparent (Credit Union Journal, May 20) in sharing the performance of the legacy assets.
Co-Ops for Change is the website created by Chip Filson, chairman of Callahan and Associates, with a goal of re-orienting credit unions, including NCUA and the political process of board appointments, back toward the Seven Cooperative Principles.
"The conservatorship of the assets of the five corporates was the single most significant event in the credit union system during the financial crisis," Filson said. "But until now, credit union owners have had to take the wisdom of this action on faith."
'Crowd-Sourced' Tracking
Co-Ops For Change is inviting CUs to add to the website, not only with blog content but to help value the legacy assets. The site explains that any of the investment securities can be updated for current principal value or loss by any visitor to the site. Each proposed entry will be temporary until reviewed using Bloomberg or another expert market data for reasonableness.
Filson explained having an open, "crowd-sourced" tracking system gives the credit union community access to the latest data on each corporate's portfolio taken to collateralize the NCUA Guaranteed Notes. Where an actual or implied cash loss has occurred, these will be posted and totaled on an ongoing basis.
Valuing 'Receiver's Certificate'
The spreadsheet data can be compared with the latest available other-than-temporary-impairment losses, which each of the five corporates had established as of June 2010, and had expensed from existing capital. "By providing ongoing, transparent, real-time tracking of the assets, the industry can update the status of the remaining capital value for each corporate's member credit union, as well as establish the potential for recovery on each credit union's Receiver's Certificate," Filson said.
Randy Karnes, CEO of CU*Answers, who is actively involved with Co-Ops for Change, hopes the information will start an open dialogue within the industry and an ongoing evaluation of the legacy assets--as well as the performance of NCUA.
"The corporate crisis was a huge event and should be a learning situation and a huge rallying point," said Karnes, who emphasized that analysis of the legacy assets must be trusted.
