The credit union industry has been discussing possible solutions to the problem. On Nov. 13, CUNA was planning to convene a summit meeting on the subject in Chicago.

In his remarks at MACUMA, Fazio said that because of the sluggish economy and the problems facing corporates, "the new normal for credit unions will be more challenging than the old normal."

He added that the agency 's conservatorship of the five corporates was needed to ensure the financial health of all credit unions and noted that 98.6% of all other-than-temporary-impairment charges within the corporate system have been at those five corporates.

As the NCUA seeks possible potential merger partners for the conserved corporates, credit union executives are hoping that the process is transparent.

"I don't want a situation where the existing member-owners of the corporates have a preferential position during the process. The NCUA should do the right thing so the process is fair and costs the agency, and credit unions, the least amount of money," said Corporate America Credit Union President/CEO Thomas Bonds.

In addition to dealing with the conserved corporates, the agency is revising rules governing all corporates. At its Nov. 18 meeting, the agency is scheduled to issue proposed rules that expand on the rules approved in September. According to comments by agency officials, the proposed rules would allow federally chartered corporates to assess annual membership fees and increase the amount of retained earnings. Natural person credit unions would only be permitted to join one corporate. The rule will also outline the rules for the corporate system to set up a risk mitigation committee.

The new rule would also require credit union boards to have a recorded vote on each item. The rule will also spell out how credit unions without federal deposit insurance can be levied an assessment to pay for the rescue of the troubled corporate credit unions.

The agency has also sent out for comment its proposed rule on corporate credit union chartering.

Applicants must demonstrate the depth of their support from prospective members and lay out in great detail current and projected market conditions. The proposal requires that at least seven people submit the charter application, and they must demonstrate that there is a "sufficient customer base," as evidenced by surveys or written comments. The applicants would also be required to present a business plan that covered items such as written policies for shares, lending and funds management, and semiannual projected financial statements for the first three years of the corporates' operation.

In its comment letter, CUNA urged the agency to spell out in greater detail its criteria for evaluating the leadership skills of potential applicants to the corporate credit union's management team. It also urged that the agency not penalize the corporate if it doesn't meet every goal in its business plan.

NAFCU urged the NCUA to clarify how a new corporate would meet the requirement to keep its total capital at 4% or more of its moving daily average net assets on the day the charter is issued. It also requests the agency spell out what, if any, legal liabilities subscribers would face if the new corporate fails to meet one or more of the targets set forth in the application.

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