Two Corporate CEOs Generally Happy With NCUA Plan

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BIRMINGHAM, Ala. – Actions taken Friday by NCUA to conserve three more corporates and announce the new corporate credit union rule were “well thought out, bold” and what needed to be done to further protect natural-person CUs and their members, Thomas Bonds told Credit Union Journal.

The CEO of Corporate America CU was not surprised by the conservatorships of Members United Corporate FCU, Southwest Corporate FCU and Constitution Corporate, nor by what was outlined in the final rule. “What NCUA came out with was very similar to what was proposed,” noted Bonds, who surmised that the actions strongly signal a consolidation of the corporate system looms in the future. “There will be significantly fewer corporates. I’m not sure we’ll get down to regional corporates, but we will get down to something very similar.”

More near-term concerns are likely held by corporates that have yet to transition away from U.S. Central investment and payments system services, cautioned Bonds, whose CU took detailed actions more than a  year ago to move Corporate America off U.S. Central systems. “It is very difficult to transition off of a payments system platform in its entirety,” Bonds shared. “For corporates still reliant on [U.S. Central] and don’t have staff to devote to the transition, it’s not going to be possible. They have a very narrow window [two years, according to the new rule] to take care of both of these issues.”

In Columbus, Ohio, Corporate One FCU CEO Lee Butke agreed with NCUA’s actions and emphasized that the conservatorships and new rule represent the “path back, not a path out,” for the corporate system. “The good news is there is now clarity on what the requirements are, and it’s time to move forward.”

Butke told Credit Union Journal that while he does not view the rule’s direction on corporate investments as overly restrictive, and that corporates will still be able to generate “substantial” net interest margin if costs are under control, he does agree the new rule will not allow for the creation for an “ultra-competitive term book. That just won’t be possible, and practically, that business should go to the agencies.”

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