A Credit Union Journal article "Matz Outlines Several New Regulatory Proposals" really only talked about one new regulation and, in my humble opinion, it was a joke. So NCUA Chairman Debbie Matz is trying to make loan participation originators keep 5% of the loan to: 1. Make them more responsible; and 2. Keep future losses from having a major impact on credit unions that do participations as it as it did when the economy collapsed.
So now if this goes through, should you have $5 million in participation loans that go belly up you only take a loss of $4.75 million and the originator takes a loss of $250,000 which the originator probably made it up on the interest on the $5 million they loaned out. Does this really save any credit union or is this just blowing smoke as usual?
Roger Licht, CEO
Credit Union One
Fond du Lac, Wis.
