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 could cost credit unions $5 billion to fund.
"I blame CUNA," said 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.
But Mica last week defended CUNA's role on the board of U.S. Central FCU.
Mica said representatives from CUNA and the Association of CU Leagues were added to the U.S. Central board in order to bring a "different perspective from that of the corporate credit union CEOs," who hold the seven other seats on the board, and added he believes the arrangement "has been of value to the credit union system."
Unrealistic Expectations
"As to the current crisis, experience has shown that few people, if anyone, anywhere in the U.S. financial system were able to predict the meltdown in the mortgage-backed securities market - the source of this predicament - in advance. To expect any individual U.S. Central director to have done so is not realistic," said the CUNA chief executive.
Mica asserted that the information obtained by CUNA's representative was confidential under his fiduciary responsibility.
He said CUNA's Executive Committee recently reviewed the arrangement on the U.S. Central board "in light of current events" and decided to continue its representation on the panel.
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 laid-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 last week 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.
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 and at NCUA, where Gigi Hyland, formerly of the Association of Corporate CUs is a 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 CFCU's share of the bailout at $3.3 million.
A Career In Credit Unions
Prins has had a long career working with credit unions. 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.
