ALEXANDRIA, Va. – As a broad consensus is emerging on the need to restructure the corporate credit union network, disagreement is surfacing about who will be responsible for the restructuring; will it be NCUA, or the industry itself, led by CUNA and the leagues.
CUNA and the leagues, which created the corporate network, are insisting that credit unions themselves take the lead role in any restructuring, in comment letters submitted to NCUA on corporate reform. But some in the industry believe the critical decisions would best be left to NCUA as an independent arbiter.
In an extraordinary admission, CUNA, which had the lead role in U.S. Central FCU, conceded the two-tiered corporate system with U.S. Central at the top, should be eliminated and the network of 28 corporates should be consolidated into a handful, not a defined number. "In any event CUNA does not support having NCUA determine the appropriate number of corporate credit unions," wrote CUNA. Rather, they recommended that member credit unions they represent determine the number of corporates. The comment letter was signed by CUNA President Dan Mica and VyStar CU President Terry West, who chaired CUNA’s Corporate CU Task Force.
Gary Wolter, head of the Alabama CU League and dean of the league presidents, also insisted any corporate restructuring be developed by the industry. NCUA, wrote Wolter, "must show a willingness to work with credit unions in resolving this and future issues. It is, after all, credit unions that are being required to fund any action by the NCUA as well as cover any losses to the NCUSIF."
"NCUA," wrote John McKenzie, president of the Indiana CU League, "should be careful to avoid infringing on state powers given that some corporates are state chartered."
But a group of large well-known credit unions, calling itself the Corporate Credit Union Stabilization Partnership, is calling on NCUA to take control of the restructuring process.
"The NCUA must drive change within the (corporate network)," wrote Dennis Pierce, president of CommunityAmerica CU, who was representing the group. "The corporates in the (network) have not demonstrated that they can work together in a cohesive manner to lead the way out of this crisis. Credit unions could do this but the (group) believes that the central leadership of the NCUA, through the thoughtful use of its various authorities, is the most effective and timely manner of addressing today’s crisis."
The group represents: CommunityAmerica CU, Bellco CU, Bethpage FCU, ESL FCU, NuUnion CU, Pennsylvania State Employees CU, San Antonio FCU, Star One CU, State Employees CU of Maryland, Texas Dow Employees CU and Wright-Patt CU.
NCUA has received more than 450 comment letters on the so-called advanced notice of proposed rulemaking, which will be digested by NCUA staff and configured into a proposal to restructure the corporate system.
While large credit unions generally called for the consolidation or elimination of the corporate system, small credit unions, which use the corporates more argued for a maintenance of the status quo.
There was consensus on several issues:
* U.S. Central FCU should be eliminated under the current NCUA conservatorship;* the network of 28 corporates should be consolidated to as few as three;
* NCUA should create a separate insurance fund for the corporates, which are now insured by the National CU Share Insurance Fund;
* corporate investment powers should be drastically reduced, probably to no more than those afforded natural person credit unions;
* certain functions performed by the corporates, such as payment systems services, are too important to be left to entities not controlled by credit unions.
