Art Lehman, CEO of Kokomo Heritage FCU, waxed philosophic about news that Members United FCU's toxic assets performed better than expected but that his CU will not benefit directly.
"That's the joy of being part of a cooperative," Lehman said. "When it hurts, it hurts us all, and when it helps, it helps us all."
Returning gains from toxic corporate assets to the share insurance fund, rather than to the corporate that currently owns them, is like the difference between six and a half dozen, he added.
Lehman's $7 million, Indiana-based credit union is a member of Members United Corporate FCU, which announced today its toxic assets are performing better than previously estimated. Kokomo Heritage has so far written off $56,000 worth of Members United contributed capital as a result of previous credit loss estimates.
Lehman said he'd like to get that money back, and said he's never liked accounting rules that require OTTIs be taken for credit loss estimates. However, he said if Members United's toxic assets are sold before the gains can be recorded, and profits are instead returned to the share insurance fund, so long as they result in a lower assessment bill for everyone, he will be satisfied.
Having researched alternatives to Members United services, and the costs associated with switching vendors, Lehman said recapitalizing Members United or a merged entity is the least expensive solution for his small cooperative.