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CUNA keeps push on for sound legacy asset approach
WASHINGTON (12/2/09)--The Credit Union National Association (CUNA) continues to push the National Credit Union Administration (NCUA) for a reasonable approach regarding possible recoveries on corporate credit union legacy assets, encouraging the NCUA in a Dec. 1 letter to develop an approach that addresses legacy assets and also allows capital holders to benefit if confirmed losses are below estimates. In the letter to NCUA Chairman Debbie Matz, CUNA President/CEO Dan Mica said that it is “unfair to require credit unions to irretrievably write down their capital” in corporate credit unions “on the basis of the agency’s estimates of future losses, with no avenues of future recovery should those estimates prove to be overstated.” The NCUA in its letter No. 09-CU-10 stated that NCUA corporate rules support the depletion of corporate capital. While CUNA is aware that the NCUA is “dealing with a range of difficult issues,” Mica said that “how NCUA ultimately decides this issue will have ramifications of the utmost significance for corporate as well as natural person credit unions.” CUNA also aired concerns over legacy assets at an NCUA meeting on capital depletion held in early November, and NCUA Chairman Debbie Matz responded, saying that a successful solution would hinge on whether or not current holders of depleted capital accounts can legally retain some form of rights to any future earnings on corporates' "legacy assets." Matz said that it was “unlikely that earnings or losses from legacy assets can be isolated or set aside in ongoing corporates. Nor can corporates' depleted capital be frozen in a way that would preserve the integrity of their capital going forward." "However," Matz added, the NCUA is “exploring creative ideas to address legacy assets as well as to allow affected capital holders to benefit if confirmed losses are less than recognized losses. Any such alternative approach must be consistent with all legal and accounting requirements, and uphold the fundamental purpose of capital." For the full letter, use the resource link.


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