MIDDLETOWN, Penn. — One week after public release of recommendations for changes to the way corporate CUs operate, reaction is generally mixed among natural-person CUs and corporates themselves.
The report, from a joint CUNA/NAFCU effort called the Corporate Credit Union Restructuring Policy Task Force, calls for the services of corporates to be limited to a defined set, including payments and settlements, liquidity and short-term investments; for all participating CUs to contribute capital, for a reduction in the number of corporates and for better, more qualified board members, among other changes ("
Not everyone is embracing all of the recommendations, which were provided to NCUA in advance of its proposed rulemaking. Modifications to the corporate system are needed, but they must be made through a bottom-up approach, says Mid-Atlantic Corporate FCU CEO Jay Murray. He criticized the CUNA/NAFCU Joint Task Force report for suggesting wholesale changes from the top-down, which he believes could leave natural-person credit unions with a system that does not fit them.
"Obviously we need a well-capitalized system," said Murray. "There are risks no matter what we do, so it needs controls and proper oversight. All of that is important; what needs to be made very clear is how is that best done in the future and I think credit unions need to decide what they want from their corporates and make a decision. They are the owners, they should decide and they should be clear what they want. Just demanding that it be different doesn't solve the problems."
Murray called the current, two-tiered corporate structure a "good system," arguing that corporates that find themselves in trouble, such as failed Wescorp and U.S. Central, were "trying to meet what the demands of the membership were."
Consolidation may be necessary, but making arbitrary decisions on the number of corporate CUs makes little sense, Murray added, especially when market forces are likely to make the best changes over the long run.
"I don't think anyone has shown what the right number is. No one has demonstrated what the most efficient way of conducting this system would be," he said. "There has been ongoing consolidation in our industry, and I think that will continue as the market demands it."
