WASHINGTON – Immediately after NCUA unveiled its proposed new rules for corporates, both CU trade associations saw a few streaks of silver lining in the plan.
“There are some positive aspects for credit unions in the actions that NCUA has taken, the biggest being that credit unions will only have to cover the actual, eventual credit losses – and nothing else, including market losses,” said CUNA CEO Bill Cheney. “We advocated for that and are gratified the agency listened to us. However, the credit losses will be substantial – in a range now estimated of between $8 billion to $10 billion; but only time will tell exactly how much or how little.”
Cheney said much of what NCUA has put forth is similar to the recommendations made by the group’s Corporate Task Force. “There is still much to digest here, and we’ll have to take the time to cull through everything that the agency has done in order to have a clear picture of its impact on credit unions,” Cheney said. “[Friday’s] actions have the potential to move us past this chapter and better position the credit union system for the future – while being invisible to consumers who rely on credit unions for affordable financial services.”
NAFCU President Fred Becker said the group is “particularly gratified that the final rule on corporate credit unions keeps many of the same principles from the proposed rule that we generally supported. We also appreciate that, as we had recommended to the agency, the NCUA hired an outside firm to advise it on the formulation of new capital, investment and risk management rules.”
“In terms of legacy assets, we are pleased to see that NCUA has taken total costs into consideration in the final plan,” Becker continued. “Since the beginning we have urged NCUA to seek the lowest cost resolution that would have a minimal impact on the insurance fund. We are glad to see that Treasury has granted NCUA an extension until June 2021 for corporate stabilization assessments which will allow them to spread the costs to natural person credit unions.”
Mary Martha Fortney, president of the National Association of State Credit Union Supervisors (NASCUS), said state regulators have been working with NCUA on creating a stronger approach to regulating corporate CUs. “NASCUS commends the agency for completing the enormous and complicated task of stabilizing the corporate credit union system and re-promulgating its corporate rule,” said Fortney. “From the start, state regulators and NCUA worked to address corporate credit union issues in an equitable fashion that protects safety and soundness with a focus on enhanced joint federal-state regulator supervision. NASCUS and state regulators anticipate continuing their active role as the final rule is implemented.”
