On-Site Coverage: CUNA Task Force Recommends Radical Changes
Declaring the existing business model to no longer be viable, the CUNA Corporate Credit Union Task Force today released a report that asks CUNA's GAC and board to support a radically pared down corporate system.
Noting that credit unions are unwilling to recapitalize corporates and "several groups of credit unions" are organizing their own cooperatives to replace them, the 13-person panel called for corporates to be limited to settling and payments services, and meeting short to medium term liquidity needs.
Corporate investment services would be limited to agent or advisory roles, with investments remaining on natural person credit union balance sheets.
Natural person credit unions "must maintain or develop the tools and resources to manage those risks as opposed to relying on corporates to handle them," the report stated.
"One of the key premises of the report is that natural person credit unions are unwilling to recapitalize the corporate system," said CUNA Deputy General Counsel Mary Dunn.
The task force criticized the NCUA's lack of direction in the transition of corporates to new regulatory standards like higher capital requirements. The NCUA also has not yet released its plan for so-called "legacy assets," the impaired mortgage backed securities responsible for most corporate losses, which also drew criticism. The NCUA should release that plan before adopting final corporate regulations, the task force said.
Dunn said the report, which was released following CUNA's board meeting at the Governmental Affairs Conference, will serve as the basis for CUNA's comment letter on the proposed rules.