The release of the Government Accountability Office's report denying credit unions' need for a secondary capital alternative set off a weird chain of events, even by Washington standards.
First, the Independent Community Bankers Association, which has been trying to carve out a leading role in the anti-credit union crusade, released a bizarre press release-filled with major factual errors-purporting to tout the report. The release stated that the GAO report criticized NCUA's plan to allow credit unions to issue stock! Huh?
NCUA's proposal? As anybody following the issue knows, NCUA has never endorsed secondary, or alternative, capital allowances for credit unions.
Stock?? Proposals being circulated by the credit union lobby would allow credit unions to issue debt, but certainly not stock! There are major differences between stock and debt and the bankers, of all people, know that.
When asked about the release, an ICBA spokesman said he would get back to me, but never did.
Then, California Congressman Brad Sherman, one of the few in Congress who are working for the secondary capital issue, issued his own press release, stating, "Congressman Sherman Releases GAO Report on Secondary Capital." This was the day after the GAO had issued the report to anyone who was interested in it.
While insisting that the GAO report was not the final word on the issue, Sherman said he will continue working on addressing the capital needs of credit unions, but adeptly danced around the issue of secondary capital, neglecting to say whether he will continue pursuing that issue, the very one addressed in the report.
To top it all off, the California CU League, which has been the chief proponent of secondary capital and had persuaded Sherman to push for it, issued its own release claiming the league was encouraged that the GAO does not oppose supplemental (secondary) capital. The league's perspective was based on the fact that the GAO, while insisting there is no "compelling need for secondary capital" now, did not expressly rule it out as a future option.
By then, my head was spinning.
