Any changes to the corporate credit union system should include allowing solvent corporates to survive, stronger regulation of corporates' investments, and making membership capital voluntary, NAFCU wrote today in its comment letter to NCUA.
Letting market forces, rather than the NCUA, determine any consolidation of corporates is preferable and the agency should not separate the investment and payment functions of the corporates, NAFU President Fred Becker wrote.
He also argued that the corporates' investment powers should be maintained but NCUA needs to institute measures that would limit the concentration of risk.
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Becker added that corporates should operate under a risk-based capital structure with a minimum risk-based capital ratio-calculated as capital divided by risk-based assets–required. But corporates should not be required to maintain membership capital. Any voluntary membership capital should have a maximum cap and an assessment based on usage.
He also wrote that corporate credit unions should have boards consisting only of board members and employees of natural person credit unions serving at most three, three-year terms. No trade association or credit union league employees should serve on boards, to avoid potential conflicts. Corporate credit unions should also have independent supervisory committee and an independent investment committee.
NAFCU was responding to the NCUA's request for comments on the structure of the structure of the corporate credit union system. The NCUA requested the comments, which are due today, when it issued its program to stabilize the corporates in January.
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