A crowdsourcing project from the Chip Filson-founded Co-Ops forChange aims to marshal help from industry executives to doublecheck the NCUA's legacy asset loss figures.

The advocacy group has postedspreadsheets online that contain 2,504 legacy asset CUSIPnumbers, which are identifying numbers given to all securities inNorth America, for investments formerly owned by five failedcorporate credit unions.

Filson obtained the numbers from Credit Union Times,which first obtained them from the NCUA in May along with other legacy asset information.

By making the numbers public, Co-Ops for Change hopes creditunion executives and others interested in tracking legacy assetperformance will use financial websites to look up the currentvalue of each investment and add it to the database.

The actual performance of legacy assets formerly owned byWestern Corporate FCU, U.S. Central FCU, Members United CorporateFCU, Southwest Corporate FCU and Constitution Corporate FCU is ofinterest to federally insured credit unions because losses incurredby the investments are currently being repaid in the form ofannual assessments.

“An open, crowdsourcing tracking system gives the credit unioncommunity access to the latest data on each corporate's portfoliotaken to collateralize the NCUA Guaranteed Notes,” said Filson,founder of Co-Ops for Change and chairman of Callahan &Associates.

Actual or implied cash losses will be posted and totaled on anongoing basis, he said.

The spreadsheet data can be compared with the latest availableother-than-temporary-impairment losses, which each of the fivecorporates had established as of June 2010, and had expensed fromexisting capital.

By providing ongoing, transparent, real-time tracking of theassets, Filson said the industry can update the status of theremaining value of each corporate's members' capital, as well asestablish the potential for recovery on each credit union'sReceiver's Certificate.

“The conservatorship of the assets of the five corporates was thesingle most-significant event in the credit union system during thefinancial crisis,” Filson said. “But until now, credit union ownershave had to take the wisdom of this action on faith.

The ability for credit unions that owned those assets to reviewthe securities' status is vitally important, added Filson ally,CU*Answers President/CEO Randy Karnes, because it could allow theNCUA and credit unions to learn and avoid costly future misstepsamong corporates and all credit unions.

“If NCUA doesn't use a more dynamic approach to regulation,where they are studying and learning what the best solution is,then it will destroy both sources of credit union soundness: Memberconfidence and capital,” Karnes said.

“In the case of the corporates, member confidence wasundermined, thus blocking the corporates' only way to rebuildcapital,” he said. “That's how the independent cooperativeliquidity system was dismantled.”

Karnes said the fact that banks can access the capital marketsand promptly raise more capital marks one big difference betweenbanks and credit unions. And it's a key reason why regulators offinancial cooperatives should not treat credit unions likebanks.

“After a crisis, banks redress their balance sheets as fast aspossible, writing off as much as they can up front, to make theirgo-forward balance sheet and income statement more attractive tonew capital investors,” he said. “In this way, banks can rebuildcapital quickly by obtaining contributed capital.”

Neither of these options is open to credit unions, Karnessaid.

Filson said it's unclear whether the NCUA was aware of thecapital consequences of its action – or the devastating impact itwould have on a corporate network that most credit unions deeplyrelied upon for financial services at a reasonable cost.

“Either the consequences were ignored, the regulator wasimitating the bank regulators, or it was, in itself, acting like abank by taking all the conserved corporate takeover lossesupfront,” Filson said. “Then the agency could imply it had savedthe day as things got better in later years.”