NCUA Rejects Bankers Appeal On CUSecondary Loan Market
WASHINGTON - (04/27/05) -- NCUA said it won't consider theAmerican Bankers Association's request to reconsider a pilotprogram allowing CUNA Mutual Group to set the groundwork for a newsecondary market for credit union loans. NCUA Chairman JoAnnJohnson said Tuesday the NCUA Board has no intention ofreconsidering its March 17 decision approving CUNA Mutual's CUSystems Fund, which will buy and pool member business loans fromcredit unions, then sell shares in the pool, or fund, to individualcredit unions. "We feel it's a well-thought-out and very soundprogram," Johnson told The Credit Union Journal, after speaking toWomen in Housing Finance, a Washington trade group. Johnson saidshe sent the ABA a letter acknowledging their concerns on safetyand soundness and the possibility the program could help creditunions circumvent the cap on business lending, but said the creditunion regulator plans to monitor the pilot closely. CUNA Mutualsees the business loan fund as the first in a series of funds thatwould eventually buy credit card, mortgage, community development,and other loans from credit unions, creating a whole new secondarymarket for those loans, while keeping them within the credit unionmovement.