SAN DIEGO - NCUA’s General Counsel, Bob Fenner, said that a lack of proper due-diligence and internal controls at some credit unions will mean the industry will continue to face “pockets of problems,” but in general those problems should be limited.
Fenner, who acknowledged that some of those pockets are indeed deep and have led to “significant costs to your insurance fund,” said that other potential risks are being overblown, including those related to corporate credit unions.
“We do have some corporate credit unions faced with a situation in which their unrealized losses, and it’s important to emphasize the unrealized, actually exceed their GAAP capital in some cases,” said Fenner in remarks during NAFCU’s Annual Convention. “This would only become a problem if they had to sell those mortgage-backed securities en masse. They have member credit unions that understand that, so there is no reason for that. These securities are undervalued, and not because they aren’t good securities, it’s just that there is no market to buy these securities.”
Separately, and qualifying that he was speaking only for himself and not the agency, Fenner said he was surprised at the recent Treasury report proposing the elimination of a credit union regulator. “As for the Treasury report and it’s recommendation for elimination of credit union system as we know it, it’s curious to me they would want to abolish the one portion of the U.S. financial services system that has not contributed to the problem but has instead continued to do something meaningful to the average worker who has been hardest hit by the problems.”(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
