The three letters that appeared on page 10 of your Oct. 12 edition exhibit three completely different levels of understanding of the issue of alternative capital for credit unions.
Jay Johnson (
Swings & Misses
Timothy Richey (
I do appreciate Mr. Richey's desire to allow us to raise alternative capital from outside investors. Many of us agree with that position but it is just not possible to make that happen at this time. Such a proposal faces likely resistance from legislators, regulators and the administration. In addition, some segments of the credit union community would oppose this option and to get this, or any, legislation passed will require a unified effort of substantial measure. And it's pretty clear that the coming months, with the current appetite for regulatory changes being so strong, will create the best opportunity for legislative action that we will have for many years. As to the thought that members aren't sophisticated enough to understand this concept, don't underestimate the intelligence of our members. I've talked to many in recent months who are very knowledgeable and who would consider an uninsured option.
Michael Dillon (
Insidious Argument
The other argument that Mr. Dillon uses is the most insidious. He states that it "only serves the very largest credit unions." Now I should acknowledge that I work for one of those large credit unions that operates on the west coast of Florida and is suffering through a severe and protracted economic recession (and yes, we would hope to be an early adopter of alternative capital). But if anyone thinks that all credit unions aren't suffering from this economic downturn and the resulting credit union losses, you're just not paying attention. There are a record number of credit unions, both large and small, below the 6% or 7% net worth benchmarks. There are many others, large and small, at all net worth ratio levels that have reduced benefits and services to members for fear of future losses that would move their net worth closer to 7%.
We have a huge bill facing us for the corporate losses, past and future. We have a real possibility of substantial natural person credit union losses in the coming years (Chairman Matz said as much before Congress last week). Who will pay for all of this? You can bet it won't just be the largest credit unions — it's going to be all of us. If we don't come up with a better option for growing capital, the credit union community will be digging out of this massive hole for many years to come. Forget about growth, we risk becoming irrelevant!
The proposal before NCUA isn't perfect but it is the best shot we have at expanding our capital options. Let's not waste the opportunity!
Tom Dorety, CEO
Suncoast Schools FCU, Tampa, Fla.
LETTERS TO THE EDITOR
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