ALEXANDRIA, Va. – NCUA officials told representatives from the corporate credit unions yesterday they have not definitively ruled out the possibility they could recapture losses on their U.S. Central FCU capital they have depleted – if losses on the U.S. Central portfolio turn out to be less than currently projected.
But the possibility of recapturing the loses are slim, the NCUA officials said during a closed door meeting attended by 40 corporate credit union representatives and lobbyists at NCUA headquarters yesterday. The press was barred from the meeting.
But individuals at the meeting told The Credit Union Journal last night NCUA still believes that generally accepted accounting principles would prevent the corporates from recapturing the capital that has already been extinguished.
Several attendees expressed concern about the effect the capital issue could have on the National CU Share Insurance Fund and how the potential for the recapture of capital could affect efforts by the corporates to raise new capital.
"It was a good discussion but no final resolution was arrived at," said one attendee who did not want to be identified because NCUA urged that the contents of the meeting be kept confidential.
The meeting comes as U.S. Central continues to deplete its member capital amid growing losses and the depletion of the capital has trickled down to the holders of the capital, that is, U.S. Central’s 26 corporate credit union members. The depletion of their capital has, in several cases, exacerbated losses realized by those corporates on mortgage-backed securities, forcing them to, in turn, deplete the capital of their own natural person credit union members.
The corporates are hoping that the troubled mortgage securities held by them and/or U.S. Central will end up performing better than currently projected and the losses will be lower, thereby allowing them to re-book capital that has been depleted over the past year.
After the meeting, NCUA Chairman Deborah Matz issued a prepared statement that said, "I appreciated the willingness of the corporates, credit unions and their representatives to engage in a very substantive and wide-ranging discussion of issues relating to the treatment of corporate capital and the upcoming NCUA corporate rulemaking. The dialogue was constructive and, I believe, helped NCUA and all involved parties better understand the variety of issues and viewpoints before us. My intent is to immediately begin an analysis of the information received, take a fresh look at the capital depletion issue and its component parts, and make certain that NCUA is proceeding in a way that satisfies all legal, policy and accounting requirements."
