WASHINGTON (9/4/09)-- A unified credit union view of the future of the corporate credit union system is the product of a joint task force appointed by the chairs of the Credit Union National Association (CUNA) and the National Association of Federal Credit Unions (NAFCU). The task force’s detailed recommendations cover the major areas of the corporate credit union system: services, capital, structure, corporate governance, federal regulatory oversight and insurance of shares and deposits in corporates. The task force’s recommendations are offered as a comprehensive plan. The task force recognized that the suggestions being made represent a departure from the current corporate system. The proposed system implied by the task force’s suggestions represents a future corporate system that the task force believes that natural person credit unions would support and use. Some of the key findings of the joint CUNA-NAFCU task force include:
* Services of corporates should be limited to a defined set, including payments and settlements, liquidity and short-term investments. Further, longer-term, on-balance sheet investments should not be offered by corporates; * Contributed capital should be required for membership and service use by credit unions; corporates will have to present a sufficiently compelling business case covering both the value of services provided and strong risk control; * With limits on risk-taking, competition among corporates will be driven by efficiency, placing a premium on economies of scale and thus creating substantial pressures for consolidation; * Insurance coverage for natural-person credit union (NPCU) shares and deposits in corporate credit unions must be limited to the maximum coverage for personal deposits and shares in the NPCUs; * National Credit Union Administration (NCUA) oversight of corporates must be improved, with adequate qualified staff with special knowledge of the complex operations of corporate credit unions; * Corporate board members must have sufficient expertise to govern their corporate consistent with the powers of the corporate credit union.
The task force delivered its views Thursday in a report to the NCUA board, and effort intended to maximize credit unions’ impact on the NCUA’s rulemaking process concerning corporate credit unions. “The circumstances of the current corporate credit union system have had an enormous impact on the credit union industry, and we want to make sure going forward that credit unions have as much input as possible on how to best enhance the system for the future,” said NAFCU Chair Brad Beal. “We undertook this as a collaborative effort because we wanted to develop recommendations that were comprehensive and strategic. We strived to address the challenges of balancing risk and the needs of natural person and corporate credit unions in our recommendations,” said CUNA Chair Kris Mecham. The task force’s recommendations, CUNA and NAFCU said in a release, are a departure from the current corporate system and represent a future corporate system that the task force believes that natural person credit unions would support and use Use the resource link below to access the complete report.