United Resources Post-Mortem
Reactions to the failure of United Resources to capitalize have been plentiful, as the credit union universe digests what it means that some 885 natural person credit unions are looking at the shutdown of the corporate where they do business.
First things first: NCUA immediately stepped up, promising no service interruptions for current customers of Western Bridge, the conserved institution intended to serve as the stepping stone into United Resources. Western Bridge will shutter but, assured NCUA, there is no rush. Best guesses from outsiders are that the process of winding down Western Bridge will take one year.
“This will be a deliberate, orderly, well thought out process,” said Fred Becker, NAFCU CEO. “The message here is that there will be change - significant change - just not instantaneously.”
Becker added: “The corporates are an emotional issue - they are a lightning rod.” He also said a take-away from the United Resources failure is that the biggest natural person credit unions - whose participation in any corporate may be make or break - can no longer be taken for granted.
Underlining this is that, according to capital drive numbers posted yesterday on the United Resources web pages, the formative institution had won capital commitments from 11 $1 billion and bigger credit unions. But the goal had been 21.
At CUNA, CEO Bill Cheney issued this statement yesterday: “We understand that a number of Western Bridge’s members are disappointed that the capital target was not reached. We believe that the [NCUA’s] actions and statement reflect its willingness to consider options for uninterrupted services to all Western Bridge member credit unions; that has been a priority of CUNA’s and we will continue discussions with NCUA to be sure that is indeed the case.”
One, widespread reaction to the news of United Resources’ failure is that this result was expected. Said consultant Marvin Umholtz, “Western Bridge was at the epicenter of the corporate credit union earthquake that nearly toppled the entire credit union industry. It should surprise no one that such infamy was too much to overcome. “
At First Valley Credit Union, CEO Gregg Stockdale said, “Every credit union did their own due diligence and it’s apparent that a huge majority of the board of directors of credit unions were not willing to put their members’ money at risk again. Be it because of past performance, the business plan presented, or if they just looked around for the first time in 30 years or so and decided to go a different way, we’ll never know.” Stockdale indicated his San Bernadino Calif-based credit union - with $30 million in assets -- had already planned to move its business from Western Bridge and to the Federal Reserve. “We should be operational at the Fed by month end.”