ALEXANDRIA, Va. — Amid widespread opposition, the NCUA Board last week voted amendments to its corporate credit union rule that eliminates the controversial provisions limiting credit unions to one corporate and encouraging corporates to assess charges for the corporate bailout on privately insured credit unions and CUSOs.
The watered down rule will require corporates to establish new internal control reporting, establish an enterprise-wide risk management committee, disclose certain CUSO compensation for dual employees with corporates, and allows corporates to charge reasonable one-time or periodic membership fees.
Credit unions overwhelmingly opposed the one corporate per CU proposal during the public comment period, saying they should be allowed to shop among several corporates for the best and cheapest resources.
The proposal to allow corporates to assess "voluntary" corporate bailout charges on non-federally insured members of corporates, including privately insured credit unions and CUSOs, was also widely disparaged, with earlier commentaries saying privately insured credit unions are not part of the NCUA system, which is funding the bailout, and an assessment on CUSOs would be akin to double taxation, because the CUSO's credit union owners are already paying for the corporate bailout.
In a released statement, NAFCU President Fred Becker said, "NAFCU appreciates that NCUA did not approve the provision for membership limitation in one corporate credit union and the proposal concerning corporate stabilization contributions. NAFCU opposed the proposed membership limitation because we believe such a restriction runs contrary to the principle that the future of the corporates and the corporate system should be determined by member-owners of natural person credit unions in their final rule.
'Unintended Consequences'
"In terms of the recorded board votes, NAFCU supports efforts to promote the greatest transparency possible," Becker continued. "However, NAFCU has some concerns regarding this provision including that it may have the unintended effect of discouraging qualified individuals from serving on a corporate credit union board."
Following the board vote, CUNA CEO Bill Cheney also issued a statement saying, "NCUA has improved its corporate credit union rule by eliminating requirements which we strongly argued were at odds with the interests of credit unions and the agency's legal authority."
Cheney said belonging to more than one corporate will help to develop broader support for all corporates.
Like Becker, Cheney also praised the agency for dropping provisions related to assessing stabilization costs on non-federally insured CUs and CUSOs.
