BIRMINGHAM, Ala. — Consultant and former NCUA Chair Dennis Dollar sees the task force recommendations closely mirroring what the agency is likely to put forth in its own proposal:
"The joint task force proposals are in line with the direction the agency seems to be headed with the revised corporate regulations in that there is a strong emphasis on capital and a reduction in the scope of the authorities for corporates. Whether that ends up being the final shape of the rule will take several more months to determine.
"There will be some consolidation in the corporate system as a result of the new regulation regardless of what it says because the capital requirements being increased are going to require some economies of scale and some corporates to re-examine whether they can meet their business model without considering a merger. I think it's almost a given that there will be some consolidation; the question is where it should be driven from, the regulator or the credit union marketplace. I think it should be driven by the marketplace and I believe it will. I don't think NCUA wants to be in the business of choosing survivors and I believe they would prefer the marketplace to do that, however their rules will set the parameters under which the market will operate.
"I really believe that the corporate system will be able to make its own business decisions regarding consolidation within the parameters of that regulation when it comes. Of course, if the marketplace does not address [those economies of scale] then regulatory supervision will begin to pressure those corporates that have not met the new capital standards. It's going to be a fairly fluid situation over the next 12-18 months but I think it will settle with the corporates largely driving the consolidation effort themselves."
