CUs Talk About Recapitalizing Corporates
CHICAGO-During NAFCU's 43rd Annual Conference at Navy Pier, Credit Union Journal asked attendees for their stance on recapitalizing the corporates.
Janet Cowell, CEO at the $240-million Parsons FCU, Pasadena, Calif.
The board and I are not thrilled about reinvesting. We are looking at alternatives. We have already been outsourcing our check processing to the Fed and that is working fine. We are also looking at going to the Fed for full check clearing. I know we will have to piece together a solution to not using the corporates, if that is what we eventually decide to do. For example, I do not think the Fed offers a full line of credit.
Debra Schwartz, CEO at the $2.1-billion Mission FCU, San Diego
I am not anxious to go in front of my board and say, "How about a few million more?" I am going to have to have a compelling business case to make that happen. We use the payment systems and investments of the corporates (WesCorp), but taking a few million in losses makes it hard. We are certainly keeping our options open.
Kevin Ryan, CEO at the $400-million Finance Center FCU, Indianapolis
The decision to reinvest with the corporates is sizeable due to the dollars we lost. It's a big decision to get back in business partnership with an organization in which you had a bad investment. We lost $1.5 million in capital to Mid-States. But the strength of the credit union system is staying together, and we are considering partnering with Corporate One. They have proven to be very strong throughout all the problems.
Tom Hilton, CEO at the $550-million Y-12 FCU, Oak Ridge, Tenn.
I don't like it, but I don't think we have a choice. We just wrote a check or $623,000 for the corporate assessment, and I don't like that either. I'd like to use that money for other things. We are lucky in Tennessee, however, because we have VolCorp, which is one of the profitable corporates in the country."
Nick Lacetera, CEO at the $200-million People's Alliance FCU, Hauppauge, N.Y.
We use Members United, and we will stay with them, but we will not put in capital shares. We lost too much-$2.5 million. We won't take the chance of doing that again, especially since there are too many other investments that are guaranteed. However, I do think the corporates should be kept around because the alternative is going back to the banks. Another corporate we are with has said we have to put in capital shares or they will close our accounts. As soon as our CDsmature we are taking our money out of that institution.