More than 200 representatives from credit unions, corporate credit unions, state leagues, and associations participated in the NCUA Town Hall meeting at National Harbor outside Washington, DC, on Wednesday, September 30, 2009. NCUA Chairman Debbie Matz, board members Michael Fryzel and Gigi Hyland, Director of the Office of Corporate Credit Unions Scott Hunt, Deputy Executive Director Larry Fazio, and General Counsel Bob Fennel responded to questions and comments during this second of three scheduled meetings.
While participants spoke on a variety issues, four key issues seemed to resonate most often in their comments and questions. Here is a summary of these issues and selected comments from attendees.
Directing Credit Union System Resources to Credit Unions
Concerns about how NCUA is using the system resources that are under its control came through in a number of comments. NCUA now oversees over $180 billion in collective resources in managing the two largest corporates, the NCUSIF guarantee, oversight of the CLF, etc. Managing these assets in credit unions' interest - that is, directing these resources towards credit unions rather than drawing from credit unions - is the primary concern.
"How did the ultimate decision come to be to use credit union capital instead of loans from the CLF or other system sources?"
"Capital Notes, similar to the concept used with U.S. Central, should be made available to credit unions with less than 7% net worth."
"Ensure that credit unions are involved in the oversight of system assets, including the conserved corporates, because getting buy-in at this stage is critical to moving forward."
Alignment with Other Regulatory Agencies
Questions were raised about NCUA's policies and how they differ with the approach other regulatory bodies have pursued. The need for flexibility and creativity during a period of extraordinary uncertainty in markets and the economy was underscored.
"What enabled the FHLB to deal with OTTI in its more measured way, as opposed to NCUA's draining of capital?"
"Will there be a 'payback' model so that capital is replenished as earnings come back?"
Alternative Capital Options
Credit unions raised a number of points regarding alternative capital, including the member capital proposal being issued by CUNA and NAFCU. While some expressed reservations, the focus is on how such alternatives can allow credit unions with capital constraints to continue effectively serving members.
"It appears that we need relief from a natural person credit union standpoint, some type of relief for capital accumulation other than what we have today. Will NCUA be with us to help ensure that we will thrive?"
A Vision for the Credit Union System
Perhaps the overriding theme from the session was ensuring that a vision of the credit union system’s future is perceived by NCUA through its interaction with industry leaders. The issue is that rulemaking cannot solve the range of challenges and opportunities facing credit unions today. Credit unions want to maximize the possibilities of where they can go in the 21st century.
"What is the vision we want of the credit union system? It seems most of the things we are doing are just to correct the present problems. We need to able to say, 'This is the system we want.' But we're not seeing any vision – just a lot of corrective maneuvering."
"Part of the corporate network's future design should be done jointly with the CLF to create a new capability for system access to secondary markets"
Click here to read Callahan & Associates' EVP Jay Johnson comments on the need for specific NCUA policy for managing present circumstances.