NAFCU President/CEO Fred Becker told the Credit Union Times today he thinks the NCUA is "trying something similar" to the FDIC as it attempts to separate toxic assets from corporates seeking recapitalization. Friday, the FDIC sold $1.8 billion worth of corporate debt backed by mortgage backed securities previously owned by failed banks.
Becker said his main concern over a similar plan for credit unions would be the cost of offering toxic securities at a mark-to-market price, and how that would affect corporate assessments for federally insured credit unions.
"That is the real concern for the industry," Becker said. "Credit unions are already paying 25 to 40 basis points. How much more, if any, will they have to pay?"
The trade association leader said he wasn't concerned about the FDIC's private issuance of the notes, which conceals who bought the debt, saying the FDIC chose private issuance to reduce the cost and time involved in SEC disclosures. He did acknowledge "suspicion" among credit unions in regard to NCUA transparency and anticipated a private issue might not be well received, but called the FDIC's decision to do so "rational."