WASHINGTON-While Hurricane Katrina may have pushed homes and businesses away from the Gulf shore, it may have also pushed credit unions one step closer to Prompt Corrective Action relief, even if it is only temporary. Senior staff from CUNA said they expect to see at least temporary relief from PCA requirements come out of Congress in light of Hurricane Katrina. “We anticipate that there is some serious consideration being given to moving ahead with at least a temporary fix of some sort on PCA in order to assist those credit unions in the affected area and potentially those credit unions that are assisting people who are relocated from the affected areas,” CUNA Senior Legislative Counsel and Vice President of Legislative Affairs Gary Kohn said. “I think that without that there will be several credit unions that are going to have some problems because their assets were wiped out, as were the assets of their members and, then, you compound that with those who are lucky enough to have flood insurance, once those insurance checks start coming in and being deposited that will put even more downward pressure on capital in those credit unions,” he continued. “So, I think that there’s every indication that there will be some credit unions that could have problems. Now, I don’t think we can calculate how many those are.” “There are also a number of credit unions that had sizeable numbers of members in the affected area, even if they didn’t have locations in the areas themselves,” CUNA Associate General Counsel Mary Dunn commented. “Not only that, NCUA is strongly supporting at least a temporary fix of PCA.” The agency drafted the version currently included in the Credit Union Regulatory Improvements Act (H.R. 2317) and which CUNA is working to get into H.R. 3505, the Financial Services Regulatory Relief Act of 2005. She added that CUNA met with Treasury Undersecretary for Domestic Finance Randy Quarles on the matter Sept. 15. CUNA Chief Economist Bill Hampel explained, “The problem with PCA is it’s designed to force poorly managed credit unions to restore their net worth if they get into trouble and it does so by imposing pretty punitive sanctions on a credit union if its net worth ratio falls and that’s not the situation here. It would just be sort of adding insult to injury to slap PCA penalties who are trying to work their way out of the Katrina effect.” -

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