ATLANTA — Questions about the corporate bailout came fast and sometimes furious at NCUA's Risk Mitigation Summit yesterday.
John Kutchey, deputy and acting director of NCUA's Office of Examination and Insurance, fielded queries from attendees seeking more hard details on the corporate credit union stabilization plan.
"I do feel strongly that the actions taken were the best action for credit unions," Kutchey said.
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One summit attendee wasn't buying it: "All of us feel suckered by what's going on with the corporates." Another asked why those CUs that do not invest with corporates should have to be involved in the rescue plan. One CU CEO worried that the plan's costs will impact day-to-day operations and member service.
"We looked at the downstream losses and did not want to take them on your behalf," Kutchey said. "We knew we might see catastrophic losses and the shutdown of credit unions. Some CEOs that I've talked to have responded with 'so.' And, then I ask, 'so you're okay with paying [for these potential losses].'"
Ultimately, the credit union industry has the power to decide how they want the corporate CU system to look, Kutchey said.
"As an industry, you decide if you want to capitalize the corporate system," he said, adding if they were to happen, the NCUA would take the necessary structural and regulatory analysis.
Kutchey said some issues are more pressing now. Less of an issue for him is other-than temporary-impairment or OTTI, a write-down of assets when there is a significant likelihood that the full 100% value of an asset will not be recovered. The NCUA said OTTI charges could have in impact on costs to shore up corporates.
"Personally, I don't care what the OTTI numbers are," Kutchey said. "I want to know about credit loss."
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