WASHINGTON – CUNA is being scrutinized for its role in the bailout of U.S. Central FCU and the corporate credit union network, which is estimated to cost credit unions $5 billion to fund.
The $5 billion corporate bailout was launched two days after U.S. Central announced a $1.1 billion loss for 2008, precipitating a $1 billion capital infusion into the central bank for credit unions by NCUA as part of the bailout.
"I blame CUNA," said an angry Curt Prins, a long-time director at Congressional FCU and a former CUNA lobbyist. "The (chief operating officer) of CUNA is on the board of U.S. Central. You tell me now that CUNA didn’t know (about the deteriorating condition of U.S. Central). Tell me what Mica’s doing for that million dollars we’re paying him," referring to the annual compensation for CUNA President Dan Mica.
Among the nine members of U.S. Central’s board are: John Franklin, the chief operating officer for CUNA and Bill Cheney, president of the CUNA affiliate the California CU League.
CUNA and Mica declined to comment yesterday.
The U.S. Central board also includes the chief executives from several other corporates that are experiencing financial difficulties of their own, including its chairman Joseph Herbst, the president of Members United Corporate FCU, which layed-off 20% of its workforce in November after announcing a $27.9 million loss for the first nine months of the year; and Bob Siravo, the president of WesCorp FCU, which is sitting on $2.5 billion of unrealized losses on its portfolio.
Other board members are: Greg Moore, president of Georgia Central CU; Charles Thomas, president of West Virginia Corporate CU; Jim Hansen, president of VA (Virginia) CORP CU; David Brehmer, president of First Carolina Corporate CU; and Larry Eisenhauer, president of Kansas Corporate CU.
Several other credit union executives were calling yesterday for the ouster of the U.S. Central board and management, as NCUA began posting comment letters on its advanced notice of rulemaking for reforming the corporate system.
For example, Helen Marinkovic, president of West Penn P&P FCU, called for the removal of all corporate employees "responsible for this mess." "That goes for CEOs, management and board members."
Prins said CUNA’s strategy to get its lobbyists into key positions of influence at U.S. Central, NCUA (a former CUNA lobbyist for the corporates is an NCUA Board member), and elsewhere reminds him of the days of the S&L crisis when the S&L lobbyists built up considerable influence with Congress and their regulator. "CUNA has now become the tail wagging the dog; a whole lot of tails wagging the dog," said Prins, who estimated Congressional FCU’s share of the corporate bailout at $3.3 million.
Prins has had a long career working with credit unions and is well-respected. He was the credit union staffer for then-House Banking Committee Chairman Wright Patman, perhaps the greatest credit union friend ever in Congress; he has served for 35 years on the board of Congressional FCU, and has worked as a congressional lobbyist for CUNA, under Mica.
