Natural person credit unions no longer need corporate creditunions in their current form and organizations that performfunctions currently performed by corporates should only be fundedby those who use them, Navy Federal Credit Union President/CEOCutler Dawson wrote the NCUA.

|

Because most large credit unions like his don't need or usecorporates and because of the availability of "competitivelypriced" alternatives, "the industry would be better served byeliminating the corporate credit union system," he wrote.

|

He suggests that to give smaller credit unions access toservices currently provided by the corporates, there should be twoseparate non-NCUA insured CUSOs, one to provide payment systems andthe other for investment management.

|

The capitalization of these businesses should be provided by thecredit unions that use them so that they "bear all risk in theevent of failure."

|

He also suggested NCUA consider other models for liquiditymanagement, such as creating a cooperative of larger credit unionsto lend money to other credit unions and also recommended agencygive natural person credit unions the right to accept non-memberdeposits.

|

Dawson, whose credit union is the world's largest with $56billion in assets and 3.1 million members, was responding to theagency's request for comments on the structure of the structure ofthe corporate credit union system. The NCUA requested the comments,which are due by Monday, when it issued its program to stabilizethe corporates in January.

|

To stabilize corporates, the NCUA injected $1 billion of capitalinto U.S. Central Corporate Federal Credit Union, guaranteed thedeposits of all natural person credit unions in corporates andplaced U.S. Central and Western Corporate Federal Credit Union intoconservatorship. Those actions are resulting in credit unionshaving to pay a premium to replenish the NCUSIF.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.