Last Friday’s liquidation and merger of a well-known community development credit union, the $6 million Mission SF FCU, is the latest example of regulatory excess on PCA brought on by H.R. 1151, the head of the National Federation of Community Development Credit Unions charged.
Though the troubled San Francisco credit union was barely solvent at the time of the NCUA seizure, “a decade or so ago, the credit union would have been given additional time to strengthen itself but under Prompt Corrective Action, we have seen the termination of credit unions that we believe could have survived, if given more time,” argued Clifford Rosenthal, president/CEO of NFCDCU.
Mission, which lost nearly $600,000 over the last two years on a number of faulty mortgages and soured loans, was merged into the $360 million Self-Help FCU of Durham, N.C. in a purchase/assumption transaction pushed by the NCUA. The transaction followed a public campaign by the Mission board started last fall to raise $200,000 in contributions from other CUs both in and outside of NFCDCU.
Though coming up short in donations, Mission argued it should be allowed to survive to serve a low-income Latino community that became dependent on the CU for vital financial services including literacy education.
“We believe that in many cases PCA results in greater NCUSIF losses than might otherwise have incurred” Rosenthal said Monday in a statement adding, “we don’t believe the credit union movement was well served by the introduction of PCA through HR 1151.”
The NFCDCU head went on to express Mission’s good fortune in having Self-Help FCU “available” as a merger partner giving the San Francisco CDCU “the best possible opportunity for the preservation and even expansion” of services to the inner city.
The federation has long argued, continued Rosenthal, “that merging a CDCU into another CDCU should be the first priority of NCUA.”