NCUA Revamps Corp Exams
ALEXANDRIA, Va. -- The NCUA has given all corporates new examiners, made more use of outside experts and begun to hire payment system specialists.
The NCUA's Office of Corporate Credit Unions Director Scott Hunt described those steps in response to a question from Aspire FCU President/CEO Thomas O'Shea at the Oct. 19 town hall meeting on the agency's corporate credit union rescue plan.
Hunt noted, for example, that the agency had hired an outside firm to project corporate credit union credit losses because the agency lacked the capability to do so.
CUNA and NAFCU have been pushing the agency for improvements in the examination process, but their focus has been on natural person credit unions.
NAFCU Senior Counsel and Director of Regulatory Affairs Carrie Hunt said she hopes the agency's procedures and the new corporate rule will result in improved oversight.
"They've been honest that they missed things on the corporates that they shouldn't have, and hopefully having new and more eyes examining the corporates will make things better," Hunt said in an interview after the meeting "The new rule puts significant changes in place but it is important that examiners are looking at what they are charged to look at."
The NCUA has conserved five corporate credit unions and the agency's inspector general is conducting material loss reviews on them. Once those reviews are completed, the agency will decide what, if any, lawsuits it will file against directors of those corporates, NCUA Director of Public and Congressional Affairs John McKechnie said in an interview.
The agency has transformed the five conserved corporates into bridge-chartered corporates, which hold nonlegacy assets. These will be in existence for two years. The NCUA is already making changes at some of them. On Oct. 15 it laid off 17 people at Western Bridge Corporate FCU.
Scott Hunt said at the town hall that a major responsibility of the leadership teams at the bridge corporates is to work with the member credit unions to help them deal with the transition to other entities that will replace the conserved corporates.
He noted that six of the 23 corporates not under conservatorship have already met the new capital requirements that all corporates must meet by next October.
The Treasury Department announced on Oct. 20 that the NCUA's corporate rescue plan, which has included loans from the Treasury Department, is contributing to the federal deficit.
The NCUA borrowed $10 billion to improve the liquidity in the Temporary Corporate Credit Union Stabilization Fund. The agency has until 2021 to repay the loan, and this year there was a $1 billion assessment on federally insured credit unions to continue the loan repayment process.
The NCUA is selling guaranteed notes which are based on the cash flows of the legacy assets from the five conserved corporate credit unions. The agency guaranteed notes being sold are expected to generate approximately $35 billion in proceeds over the next four months.