...Whether Corp FOMs Should Be Restricted
SACRAMENTO, Calif.-Credit union CEOs continue to react to NCUA's proposal that natural-person CUs be limited to membership in a single corporate, and that membership fees be charged, with most noting there are numerous related issues involved.
"Credit unions need to have options in our investment portfolios, but that doesn't mean investing only in the corporates," said Donna Bland, CEO of The Golden 1. "I believe credit unions should have a well-balanced investment portfolio, which includes diversification and managed concentration risk. Golden 1 has always believed you do not have all your eggs in one basket. The corporate system is a concentration risk, so we have always diversified. If a credit union is dissatisfied with a corporate, it can switch to another corporate. The limit NCUA is suggesting is not going to harm the industry."
Ken Burns, president of Patelco Credit Union in Pleasanton, Calif., said he does believe corporates should be able to charge membership fees, noting the decline in investment yields has made non-interest income
Teresa Halleck, president and CEO, San Diego County CU, said a restriction on corporate credit union memberships would appear to be beneficial to the overall industry as a risk mitigation tactic, which could benefit all CUs from a cooperative insurance fund standpoint. "The larger question remains, which is whether sufficient numbers of credit unions will elect to recapitalize even a significantly smaller number of corporates versus a migration to alternative service providers," observed Halleck.