ANAHEIM, Calif.-The search for an "enduring system solution" to the future of corporate credit unions remains ongoing, with some clarity only now beginning to take shape, according to numerous sources interviewed by Credit Union Journal during the California/Nevada leagues' annual meeting last week.
The only thing certain is that natural-person credit unions and their associations will need to take charge of the process. But how that will play out remains much less certain. Dave Chatfield, who has just stepped aside as interim president of the California/Nevada leagues, said what is being sought is an "affordable, universal solution for credit unions of all shapes and sizes." Chatfield, who told Credit Union Journal he has been asked by the league to remain onboard to lead efforts at the league related to developing a plan for corporates, reiterated what many have suggested, and that is that "aggregation might be the most important part of a lasting solution. Too many solutions might be worse than no solution at all."
In a separate interview, Chatfield's successor as president of the California/Nevada league, Diana Dykstra, said her view is it would be "foolish not to have a system solution," rather than being forced to turn to banks for services. "I think it's a matter of what it would cost us to recapitalize the corporate. We could lose more by not doing so."
Several members of the Corporate Realignment Task Force, which is made up of 12 CU representatives from eight westerns states and who addressed a standing-room-only session at the leagues' annual, made clear consolidation may not take place on the scale some envision. Jeff York, president and CEO of CoastHills FCU and the chairman of the Task Force, said some corporates have indicated they intend to attempt to continue operating on their own.
Bill Cheney, president and CEO of CUNA, said the majority of credit unions want to see a "different" solution emerge, "not just recreating a solution by raising new capital. Rather than just let market forces determine, which might be a slow process, we are trying to make a path forward. The money will be raised within the system, but not by natural person credit unions-we think you've paid enough."
CUNA hosted a corporate summit in Chicago on Nov. 13 that drew 80 invitees. Cheney said the trade group felt it was "very important" for it to take a leadership role in helping CUs determine the future of corporates. "It is important to have a system solution within the new rules,"
Brett Martinez, president and CEO of Redwood CU and member of the CRTF, said the Task Force is united on the need for consolidation of corporates due to the volume nature of the services involved. "We have no answers today, but the are confident we will have answers soon," Martinez said. "Just wait for options before making a decision and think about recapitalization or paying into the NCUSIF."
Phil Perkins, president and CEO of Western Bridge FCU [formerly WesCorp], said he expects a WesCorp advisory group to be formed soon. "We need active participation by credit unions to discuss issues such as pricing and how things are going to work," he said. Acknowledging he has been largely unable to communicate publicly while WesCorp was under NCUA conservatorship he added, "the time of great silence is over. This is not our problem to solve, dialogue is needed."
Frank Michael, president and CEO of Allied CU, said the resolution of the corporates is an issue that "will bring us together or tear us asunder-how we work together or go in different directions."
"There has to be a collaborative system to solve our problems," he continued. "I have a small credit union so I won't have much of a say — I am dependent on large credit unions. Large credit unions must receive a plan that makes financial sense, and I think there will be a plan that does that."
