NCUA May Isolate Corporate Assessment; Becker Hails Move
The NCUA Board may vote in June on whether to separate corporate CU assessments from those that cover natural person credit union losses, Chairman Debbie Matz told Wisconsin Credit Union League members.
The move would help improve NCUA transparency and budgeting accuracy for credit unions and would not increase the total amount of payments, she told about 500 credit union professionals gathered in Green Bay for the league's annual convention.
Moreover, she said, the separation "would clarify exactly what each payment is for. The Share Insurance Fund assessment covers losses at natural-person credit unions, and the Corporate Stabilization Fund assessment covers losses at corporate credit unions."
NAFCU President Fred Becker, who has publicly pressured the NCUA to improve assessment transparency so credit unions could more easily budget for it, called Matz's announcement "a step in the right direction."
The NCUA should be able to announce the corporate stabilization assessment once it completes its legacy assets plan, Becker said. That would help credit unions hit year-end budget numbers more easily because they would know the expense amount in June or July, instead of October.
However, Becker continued his call for the NCUA to temporarily reduce the 1.3% NCUSIF equity ratio or at least provide credit unions with an explanation for not doing so. Becker said the NCUA has the authority to reduce the amount, which would "ease the impact on credit unions." The agency could also extend the repayment terms on funds borrowed to cover the cost of corporate stabilization, providing further relief to credit unions, he said.
Matz said the NCUA's legacy assets plan should be revealed this summer, and the board is planning to approve final Part 704 corporate regulations by September. She gave few clues about progress toward disposing of the toxic assets, but once again put a price tag of "more than $50 billion worth of assets."
As in previous speeches, Matz acknowledged the NCUA's share of the blame for corporate losses. However, she had strong language for the managers and boards of corporates, saying they "exercised poor judgment." The NCUA reached a deal in February with seven Western Corporate Federal Credit Union members, agreeing to take over as plaintiff in a suit accusing WesCorp management and volunteers of negligence.
Matz also mentioned the NCUA's delay in releasing its 2008 and 2009 audits and the speculation it has caused, maintaining that the delay "is in no way related to the health of the National Credit Union Share Insurance Fund." Rather, she cited indecision over whether new accounting rules governing the presentation of commercial financial statements apply to federal regulators.