NEW YORK — NCUA's plan to rescue troubled corporate credit unions will end up devastating community development credit unions, according to the National Federation of Community Development Credit Unions. The Federation represents more than 200 CDCUs around the country.
In a Feb. 9 letter to the agency, Federation CEO Cliff Rosenthal said that the Federations review of data CDCU's reported to NCUA indicated that the current proposal would force 62% of CDCUs to have negative income in 2009. The Federation also reported that 18% of CDCUs would fall below the 7% standard for being considered well capitalized. Another 10.1% would fall below the line for adequately capitalized.
Instead the Federation endorsed allowing corporate credit unions to access the Central Liquidity Facility directly.
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"The lack of access to the CLF seems to us an anomaly that can no longer be sustained. Infusing funds into the corporates directly from the CLF is a wholly appropriate use of the federal financing system, and is likely to prove far more effective than the indirect method that NCUA has employed recently," Rosenthal wrote.
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