Reassurances About 1 Balance Sheet, Concerns Over Another

Register now

Credit Union Journal gets the letters. And the e-mails. And the “off-the-record, and you didn’t hear it from me, but...” whispers of concern. And when it comes to one issue, so, too, does NCUA Board Member Gigi Hyland.

In Chicago last week for Financial Service Centers Cooperative’s (FSCC) annual conference, Hyland said she and her fellow two board members are more than well aware of the worries some credit union CEOs are expressing over the financial health of corporates.

Acknowledging the concern, she is reassuring that the agency is confident in the health of the corporate credit union system, saying the financial statements currently being reported will improve over time.

“The corporate credit unions are doing just fine,” said Hyland, who headed up the Association of Corporate Credit Unions prior to being appointed to the board by President Bush. “They are caught like many other institutions in the current market. All of their investments continue to be extremely highly rated and those investments continue to perform. Because corporates have to show unrealized losses on their balance sheets, their balance sheets may be a bit skewed, but they are managing those appropriately. NCUA continues to monitor the corporates every day.”

Hyland said there is no need for panic, and that any concerned CEO can contact NCUA’s Kent Buckham, who heads up the Office of Corporate Credit Unions, or Dave Marquis, who oversees Examination and Insurance, if they need questions answered.

“We believe there is some market dislocation, but we’re on top of it,” said Hyland.

* Speaking of Chicago, from the Trivia Learned Department, its nickname the “Windy City” has nothing to do with weather conditions–instead, it’s all related to politics. Interested in details in the event you ever hop into the Cash Cab? You’ll find them on numerous online sites, such as wikipedia.

* In this space two weeks ago we addressed the discomfort created by NCUA’s proposal that credit unions regularly release information on senior executive compensation. The idea, part of NCUA’s larger data collection effort, has been embraced by CU leaders about as warmly as a quarterly “CEO Washes Members’ Feet Day.”

“The issue that has stirred up folks,” conceded Hyland. “But we think you should go through and aggregate senior executive compensation and at least disclose that.”

According to Hyland, credit unions are simply out of step with much of the rest of the market now.

“The reason is that if you look at the rest of the world the trend is toward transparency,” Hyland explained. “Charities, publicly traded companies, they all disclose that information. I don’t think anyone has objected to the concept; where the rubber meets the road is in the how.”

Hyland said credit union CEOs have told her the proposal could have some “unintended consequences.” One CEO said it could damage the “collegial relationship” he has with his staff. Other said said it would have the same effect on members, especially those who are members of a trade union and don’t have any idea how their CU’s CEO’s W-2 reads. “There have also been concerns about safety, such as credit unions along the border, if compensation data were released,” Hyland added.

The NCUA board–all of whom, incidentally, have their compensation released publicly–is still considering how to proceed.

Meanwhile, Hyland shared some thoughts on the larger effort to collect more data on whom credit unions really serve. It’s all the result of Congress essentially saying, ‘Enough already with all the claims about service to the underserved. Put up or shut up.”

“To be blunt, when you go to he Hill to talk about credit unions you hear either doubt or a desire for more information and not just anecdotal stories,” said Hyland. “They are looking for hard data. It is an effort to try to gather information to see what the member income levels are at federal charters.”

Frank Diekmann can be reached at fdiekmann 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.

For reprint and licensing requests for this article, click here.