Corporate Solution Is Not a Real Fix
The timing of NCUA's "solution" (to the troubled corporate CU system) is somewhat suspect, but at least the trade group hit the nail on the head regarding corporate investing. NCUA's proposal has been dismissed by every corporate as a second-death to their operations. NPCU's wouldn't give $0.01 to any corporate under NCUA's structure and yet NCUA insists on moving forward with their proposal. Gee, and we wonder how we got into this mess?
Now we see as time goes on the true level of the disaster at corporates - $40 billion. That's almost half of the capital of all NPCU's nationwide. Isn't it time to pull on the "credit of the United States Government"? As stated on its homepage, "The National Credit Union Administration (NCUA) is the independent federal agency that charters and supervises federal credit unions throughout the United States and its territories. NCUA administers the National Credit Union Share Insurance Fund (NCUSIF). Backed by the full faith and credit of the United States government, the NCUSIF insures the member accounts in all federal credit unions and the substantial majority of state-chartered credit unions." NCUA has utterly failed in its mission of the supervision of corporates. Our industry can't sustain a hit for the full amount of toxic waste taken on by the leadership of old. The payment of that amount would cripple the industry for years and years to come. We need a bail out!
This would be bad enough if it weren't for the losses sustained by NPCU in what can only be called "risky business". Banks-in-disguise business plans have no place in credit union land. I found it interesting that although the CUNA task force could identify the problem and solve the future threat, they had no solution for the existing $40 billion issue we are faced with. Yet, on they go, promoting MBL as if life has somehow miraculously returned to normal and we can not all get back to an expanded, and even more risky, business model. The definition of insanity comes to mind here.
We can't offer MBL's if we aren't around. We don't have the resources to take this program on at this time, and in this manner. I thought it was especially telling that NCUA stated in its last webinar that, if the MBL cap level was increased, then NCUA would strengthen up its oversight. Unfortunately, that horse has already left the barn! We need to get serious about this now, before we become a footnote in history - right next the S&L's as a good idea gone very wrong!
Gregg Stockdale, CEO
1st Valley CU, San Bernardino, Calif.
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