he NCUA Board’s proposed corporate credit union regulations are most notable for what they do not do. For example, they don’t outline a viable corporate credit union business plan going forward under the new limitations. Not that they should, but the proposed regulations become a mere academic exercise if the bar gets raised so high (although probably necessarily high) that no corporate credit union can leap it.

The proposed regulations are also totally silent about what happens to the legacy assets that weigh heavily on the corporate credit union network and the industry as a whole. These legacy assets are believed by credible industry analysts to represent as much as $30 billion in eventual losses, which could potentially cost each credit union 500 basis points in deposit insurance premiums. Every federally insured retail credit union is on the hook for these legacy assets via the NCUSIF, the Temporary Corporate Credit Union Stabilization Fund and the Central Liquidity Facility’s U.S. Treasury borrowings.

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Peter Westerman


Credit Union Times

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