CUNA Group Continues to Plot Next Steps on Corporate Model
Although it was not ready to name the 12 members of its "Next Steps" corporate working group at press time, CUNA officials did say it will include several members of its corporate credit union task force, as well as some new selections.
Despite the familiar faces, Senior Vice President Mary Dunn said this group has a different mission in mind: to evaluate service options for natural person credit unions. The effect new corporate regulations will have on corporate business models will be a key component of the group's research, but Dunn said operational and financial factors will also be evaluated.
"It's about discovering what the options are, and what can be done to make them available to credit unions at a reasonable cost," she said.
Despite the corporate consolidation message of the task force's report, Dunn stressed CUNA isn't gunning to replace the credit union-owned cooperatives. Rather, CUNA prefers that risk be effectively managed within corporates, so they can focus on continuing to provide services like payment, settlement and investment management.
Even though the NCUA isn't likely to announce final corporate regulations or a plan to separate toxic assets from corporates until June, Dunn said CUNA already knows from speaking with member credit unions that they won't recapitalize corporates until investment risk is separated from core services.
As a result, the current corporate business model is destined to change, regardless of how much the NCUA compromises on proposed regulations, she added. CUs want to prepare for those changes so they don't suffer service interruptions, can control expenses and keep as much business in the credit union industry as possible.
Corporate One Federal Credit Union President/CEO Lee Butke said he is supportive of any new dialogue regarding new solutions for credit unions and said he recognizes the need for some consolidation, particularly in payment systems. He said he was pleased the Next Steps group will include Ohio Credit Union League President/CEO Paul Mercer, saying he will serve as "an excellent representative of all credit unions of modest size."
Butke said he thinks credit unions are ready to move past "generalities about what can be accomplished" and is looking forward to reviewing new business models. Corporate One is preparing a new business model, which will show members how the $3.3 billion corporate will continue to provide services while meeting anticipated NCUA regulations, he said.
Butke has offered to share his number crunching with CUNA, but the trade organization has not responded. He also questioned whether CUNA's previously released task force plan, which he called "mega-corporate," would be as effective and efficient in practice as it appears on paper.
"We have two people on staff who have the highest possible level of ACH certification, so our members don't need that expertise on staff, they can just call and ask questions," Butke said. "Yes, we do some hand holding, and that's viewed as inefficient. But, I would challenge the assumption: is it efficient to ask for that same expertise to be present in each and every credit union?"