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Washington
CUNA will work with CUs as corporate system realigns
WASHINGTON (2/10/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney on Wednesday said that CUNA appreciates the National Credit Union Administration’s (NCUA) concerns regarding overconcentration of assets, but will work with the NCUA and various stakeholders to determine how individual credit unions can be given the most flexibility as the future structure of the corporate credit union system is decided. Cheney’s statement followed the release of the NCUA’s letter to corporate credit unions No. 2011-02. In that letter, the NCUA cautioned that “the concentration of services or the aggregation of service volumes in one entity large enough to introduce systemic risk may create an unacceptable ‘too big to fail’ scenario.” As the NCUA letter noted, many have suggested that corporate credit unions or specialized credit union service organizations would benefit from larger client/member bases. While consolidation could promote greater efficiency and improve the long-term viability of the credit union system, consolidation can also be overdone, the NCUA said. CUNA’s Corporate Credit Union Task Force and its Next Steps Working Group have backed consolidation when necessary, and Cheney noted that the NCUA has taken the steps needed to ensure that the surviving corporate credit unions will operate in the best interest of their members. The agency in its letter also warned that consolidation, and the increasingly large institutions that could result, could create issues in the event of a failure or other difficulties, potentially denying natural person credit unions access to essential services. The agency also cited the need for a comprehensive contingency plans, and reminded corporates that while the NCUA was forced to step in and take several corporates into conservatorship in recent years, “future agency action to provide such systemic support cannot be factored into contingency plans.” The NCUA added that generating income, identifying risks, and ensuring stability are “difficult enough during normal business operations,” and can “become even more complicated during any consolidation process.” For the full NCUA letter, use the resource link.
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