The NCUA will provide accounting guidance related to Western Corporate FCU's capital depletion, the regulator told WesCorp members during yesterday's Webcast.
The Letter to Credit Unions will be released today or early next week, said Mark Treichel, NCUA's acting director of the Office of Corporate Credit Union.
The letter will address how to record the loss of WesCorp capital on call reports. Treichel said it also confirms the status of membership in the institution, questioned by one caller because all member capital has been depleted.
Brett Martinez, President/CEO of the $1.7 billion Redwood Credit Union, questioned the authority of the NCUA to deplete all WesCorp capital, rather than leave a minimum to retain membership status. Treichel said the regulator has "no flexibility" to retain even one penny of capital per member, saying Part 704 regulation "clearly states" that member capital must cover losses. He added the Letter to Credit Unions will also cover that topic.
"You don't feel like you have the flexibility to not completely extinguish capital?" Martinez repeated.
Treichel confirmed that was the case, saying "yes, the regs require it."