According to a letter sent to members last Friday, the board of the $1.5 billion Eastern Corporate Federal Credit Union has voted to decline participation in the NCUA's Temporary Corporate Credit Union Share Guarantee Program, blaming the terms of participation required by the agency.
"After weighing the benefit of the guarantee against the new burdens that would be placed on EasCorp in order to obtain the benefit of the guarantee, your EasCorp Board unanimously voted to decline the opportunity, in the belief that [it] is in your best interests," wrote President/CEO Jane Melchionda.
Protecting member capital was the most determinative factor in the board's decision.
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"The board did not want to expose EasCorp's capital to systemic risk attributable to problems at other corporate credit unions," Melchionda wrote.
She added the board feared that by accepting the guarantee, EasCorp could be susceptible to NCUA reorganization that would affect all corporates, "not just the troubled ones, in an attempt to minimize the total cost to the share insurance fund."
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