MARSHFIELD, Wis. — A push by CUNA and NAFCU for member-only alternative (or supplemental) capital may be what's feasible today, but it could simply be a bridge to a solution to the capital dilemma that relies on many additional investment sources for CUs to thrive.
That's the opinion of credit union leaders and industry analysts who see the proposal that CUNA and NAFCU have come together on (
"We have to start somewhere and the only way we are going to get any legs on this is to work together as trade associations," said Pat Wesenberg, CEO of the $156-million Central City CU here and a CUNA board member. "It's a step in the right direction. Personally I think we could still maintain our tax-exempt status if we did it properly and obtained capital from other sources. But I know at this point in time we have to get over the hump — and the only way to get anything going is with member-only capital."
While CUNA and NAFCU may be publicly united on this issue now, in a memo to NAFCU about proposals on alternative capital legislation, CUNA said it continues to "insist that alternative capital proposals should encompass as many options as possible to help more credit unions." CUNA is calling for the legislative proposals on alternative capital to be modified to include a number of additional sources for credit unions, including government assistance, other credit unions, CU sponsors and select employee groups, and others.
In an e-mail response, NAFCU, which has led the effort that CUNA has signed onto, told Credit Union Journal that, "We are very pleased with CUNA's prompt and thoughtful response to our letter on alternative capital legislation. This is an issue that both associations agree warrants immediate and collective action on our part. The NAFCU Board will be reviewing CUNA's proposal carefully, and we hope to quickly come to agreement on a jointly sponsored proposal that the industry and NCUA can take to Congress."
Meanwhile, NCUA Board Member Gigi Hyland said of the effort by the two trade groups, "We are looking forward to seeing the final plan. In terms of NCUA's effort, I initiated a review internally on supplemental capital to try to annunciate the agency's safety and soundness concerns. We have also been working closely with NASCUS to craft a white paper for consideration by the NCUA Board on some of the principles NCUA believes should be fundamental to any consideration of supplemental capital by Congress."
Sentiment among CU leaders who spoke with Credit Union Journal is that a proposal needs to get moving soon, not only to help credit unions struggling with the economy, but to allow many to grow.
