Marx on Capitol: Prepay Pledge Month Needs a Makeover
There is, we are told, no such thing as a free lunch. For the NCUA, however, there may well be free money.
If enough credit unions commit money by the end of July, the agency’s prepayment program for the Temporary Corporate Credit Union Stabilization Fund will launch. It is, to be sure, a bit different than your garden variety pledge month.
Sending money to the friendly folks in Alexandria, Va., won’t ensure you will be able to watch more episodes of “Sesame Street” or “The NewsHour.” Nor will it enable you to join a fraternity or sorority.
Maybe the NCUA might have better luck raising money during the pledge period if it changed its mascot to Big Bird. Though given the agency’s propensity to spend money perhaps the Cookie Monster might be more apropos. Agency officials say the Federal Credit Union Act forbids it from paying interest. Also, even if it could, the funds would come from credit unions so you might have a situation in which you are robbing Peter to pay Paul. But many credit union executives and board members think they can find better uses for their money than giving it to the NCUA.
And given the tepid pace of the economic recovery they might be right. Maybe they can use the money to fund more business lending.
Helping a struggling entrepreneur or two or three might be a good way to use some of the excess capital that some credit unions have in their coffers.
Better yet, there’s a way that some credit unions in the New York City area can make good use of their money. Lend the New York Yankees money for a pre-playoff run pitcher shopping spree or buy a minority share in the New York Mets.
The Yankee loan seems a more prudent investment. The team is a financial behemoth and likely to make the post season for 14th time in the last 15 seasons. Yet getting to the playoffs is one thing, winning it all is quite another. And who wouldn’t to do all that they can to help the Bronx Bombers win their 28th world championship?
An added bonus is that such an investment would curry favor with NCUA Chairman Debbie Matz and Board Member Gigi Hyland. The two Democratic appointees may disagree on certain policy questions (Hyland is a bit more cautious about supporting new regulations than the chairman), but they are both Yankee fans.
The Mets investment could be more problematic. The family that owns the team, the Wilpons, need a cash infusion because they might have to pay back some of the money they made as a result of their investments with Ponzi schemer Bernard Madoff.
As a result, the team might have to have a fire sale and shed some of its high-priced talent.
On the positive side, the naming rights for the team’s stadium, Citi Field, are up for renewal in a few years. And as credit unions try to improve their brand awareness, maybe calling it Credit Union Stadium, People Helping People Ballpark or The Little Guy Park might be an effective way to tell the industry’s story. These alternative ideas are offered because it is clear after conversations with credit union executives that there is still widespread industry skepticism about the NCUA’s ability to be an effective steward of credit unions’ money.
The agency’s efforts to rescue the corporate credit union system and contain the damage from the losses caused by the investments in mortgage-backed securities have been praised. However, some said the agency should have had more stringent regulations in place to begin with that might have prevented some of these investments. Although many of those folks scream the loudest any time the agency tries to restrict a credit union’s autonomy.
If the lawsuits against the investment banks are successful, this will no doubt raise the NCUA’s reputation within the industry as have some other recent steps. Unfortunately, that may be too late to prevent some credit unions from letting their money do the talking by not lending it to the NCUA.