ALEXANDRIA, Va. – CUNA called on NCUA yesterday to lift the secrecy over its corporate plan as one of the conditions to supporting the agency’s proposal to allow credit unions to prepay their corporate bailout assessments.
“Largely because of their concerns about inadequate communications from the agency generally, a number of credit unions are very skeptical about the proposal,” CUNA President Bill Cheney told NCUA yesterday in a comment letter.
Credit unions, said Cheney, are concerned about the lack of general, ongoing information about the corporate bailout, including the performance of the assets that were owned by the five corporate failures that are now being liquidated by NCUA.
NAFCU also said it is concerned by the agency’s secrecy. “We do, however, reiterate our call for full transparency with respect to the details of the program, including the amounts the agency receives in commitments, the effect of the prepayments the agency receives on projected stabilization assessments, the transactions the agency plans to conduct to achieve the goals of the program and any other pertinent information,” said Fred Becker, NAFCU’s president, who last week assailed the agency’s secrecy over its new consumer affairs office.
NAFCU’s Becker said credit unions need a lot more information to help them decide whether to participate in the prepaid assessments. He called on NCUA to provide analysis of possible accounting issues, the impact of participation on a credit union’s regulatory capital requirements, as well as other issues that a credit union should consider both during and after it determines whether to make the prepayment.
The growing concerns about NCUA secrecy comes as the agency continues to keep a close lid on the dissemination of information related to the corporate bailout and has declined to make any executives involved in the program available to the press. Yesterday, NCUA filed separate suits against Wall Street banks JP Morgan Chase and Royal Bank of Scotland alleging misrepresentation in the sale of billions of dollars in mortgage-backed securities to the corporate failures.
The agency has also denied requests for nine months for updated cost projections for the corporate bailout. An NCUA official said yesterday the latest cost projections for NCUA are the same $7 billion to $9 billion of last September, which added to the $5.5 billion in corporate capital erased before the takeover of the five corporate failures would leave the cost of the corporate crisis at $12.5 billion to $14.5 billion.
CUNA’s Cheney also said CUNA believes NCUA should pay interest to participants in the prepaid program to compensate them for lost opportunity costs. The “transfer of benefit from participants to non-participants could be lessened by paying a below-market interest rate on the prepaid balances,” said Cheney.
