HIGHTSTOWN, N.J. (2/24/09)--The New Jersey Credit Union League (NJCUL) highlighted results from an online survey of its membership on corporates at its Corporate Credit Union Forum Feb. 19.
New Jersey Credit Union League (NJCUL) Chairman Shawn Gilfedder addresses attendees at NJCUL’s Corporate CU Forum. (Photo provided by the New Jersey Credit Union League)
The survey focused on National Credit Union Administration’s (NCUA) Corporate Stabilization Plan and NCUA’s Advanced Notice of Proposed Rulemaking (ANPR), which focuses on the restructuring of the corporate credit union network (The Weekly Exchange
Feb. 16). The session was attended by 30 credit union leaders. NJCUL Chairman and McGraw Hill Employees FCU President/CEO Shawn Gilfedder led the session, explaining the survey results and presenting some structural changes to the corporate network for leaders to consider. Some of the survey findings regarding the stabilization plan:
* Roughly 38% of respondents said NCUA’s plan would be more acceptable to them if they knew it would result in corporate restructuring and new safeguards to prevent a repeat occurrence of the system’s losses; * The most popular alternatives to NCUA’s plan were: Passing legislation that would allow Central Liquidity Facility funding to go directly to corporates, assessing the National Credit Union Shared Insurance Fund premium in stages, and expanding the Credit Union System Investment Program to make it more attractive to credit unions; * The philosophical question of whether to accept government funds showed a strong divide with 27.5% strongly in favor of the credit union movement accepting Troubled Assets Relief Program funds, while 23.5% were strongly against it; * Nearly 40% felt strongly that taking federal funds would put the credit union tax exemption in jeopardy; * About 71.2% of respondents were in favor of allowing NCUA to bypass Generally Accepted Accounting Principles and pull capital directly from undivided earnings or regular reserves so this event doesn’t impact current performance; and * Some 58.8% said there wasn’t enough capital in the natural person credit union system to absorb corporate losses and fund future premium assessments.
The second part of the survey addressed the restructuring of the corporate system, which is the focus of NCUA’s proposed rulemaking notice. Some of the key findings:
* Nearly 77% of respondents said they still have confidence in their corporates; * Respondents were split nearly 50/50 on the potential of a corporate system broken into two charters: one for corporates that handle payment processing and one for those that handle investments; * 58.8% favored limiting corporates’ fields of membership to defined geographic regions; * 58.3% did not believe corporates’ primary role going forward should be payments processing; * 60% said they still will look to corporates for investments after this or any other NCUA plan is complete; * On the question of whether corporates should consolidate, response was 55.1% in favor and 44.9% against it; * 58.7% said there is a future role for U.S. Central; * 72.3% of respondents said they did not want to see corporates fall under the regulatory purview of Treasury; * 87.8% of credit unions surveyed said they plan to pursue investment options outside of the corporate network; and * 85.7% said they did not plan to pursue payment processing options outside of the corporate network.
NJCUL will continue to update its membership on the latest developments with the corporate system. NJCUL will focus on key aspects of NCUA’s Advanced Notice of Proposed Rulemaking and take a position on those areas. The league will then distribute that to its membership for comments. The ultimate goal is to provide an effective ANPR comment letter to NCUA that summarizes the consensus of New Jersey credit union leaders, NJCUL said.