Editor’s Column: Don’t Let Telesis Be Alley-Oop for MBL Opposition
The credit union industry is in full-court press over a possible vote in the Senate to expand member business lending. Congress’ spring break could have allowed credit unions a lobbying breather had it not been for Senate Majority Leader Harry Reid’s promise for a vote on the member business lending bill.
However, the spring recess is a great opportunity for executives and volunteers to visit members of Congress in their home states, on your turf and with local small businesses.
Following the problems at the corporates during the economic crisis, the NCUA is understandably gun-shy when it comes to concentration risk. And again, Telesis was made a poster child for what high concentration in participations can do to credit unions. The management and the board are absolutely responsible for the credit union’s problems but the examiners were responsible for noticing red flags and ensuring issues were handled.
As a state-chartered credit union, the California DFI was the agency to finally pull the plug on Telesis, but the NCUA as administrator of the insurance fund has some sway. An NCUA statement issued after the participations proposal was issued, stated, “FISCUs have consistently reported higher rates of delinquencies and charge-offs on loan participations–which is one reason why the proposal would extend loan participation protections to federally insured state-chartered credit unions.”