Two Corporate CEOs Happy With Plan
BIRMINGHAM, Ala.-Actions taken by NCUA to place three more corporates into conservatorship and the agency's new corporate proposal are "well thought out, bold" and were needed to be done to further protect natural-person CUs and their members, Corporate America CEO Thomas Bonds said.
"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 over 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. He added 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."