WASHINGTON (6/18/09)--The National Credit Union Administration (NCUA) is planning to update a supervisory letter to ensure that its examiners understand the unique situations that low-income credit unions and community development credit unions (CDCUs) face, NCUA Board Member Gigi Hyland said in a recent interview with National Federation of Community Development Credit Unions President/CEO Cliff Rosenthal. The NCUA is also focusing on training its examiners to ensure that they “have a better understanding of the uniqueness of low-income designated credit unions” and fully understand how best to examine their financial status. Though current NCUA guidelines mandate that Prompt Corrective Actions (PCAs) must be taken against CDCU’s with a net worth below 6%, Hyland said that some changes in accounting that are triggered by the extended deadlines provided under the corporate stabilization proposal could help some credit unions avoid undertaking a net worth restoration plan. Hyland also encouraged examiners to sympathize with the situation that credit unions are facing, adding that credit unions that may be in trouble should be given “more time” than they would be afforded under an “immediate or six month requirement” to “get back up to the appropriate levels.” Credit unions should also advocate for their own positions through “specific dialogues” about their “sustainability” and their own plans going forward. While more pressing issues, such as the corporate credit union situation, have kept this part of the overall Community Development Revolving Loan Fund discussion off of the board’s agenda, Hyland said that the NCUA could see if there is any impetus “to address this issue from a regulatory standpoint” when a new agency chairman is in place. Deborah Matz has been nominated by the Obama administration for that position, but a date for a confirmation hearing has not yet been set. Hyland said that a recently released legal opinion from NCUA staff concluded that the board could use funds from its $16 million CDRLF as a source of secondary capital for struggling CDCUs. If this CDRLF issue returns to the fore, Hyland said that one issue the board would have to grapple with is whether or not Congress intended the CDRLF to be used for something more than loans to credit unions serving low-income communities. More generally, Hyland said that future NCUA discussions could address the overall structure of the share insurance fund and whether or not that fund should “be a deposit based fund or a premium based fund” similar to that of the Federal Deposit Insurance Corporation. The NCUA could also debate whether a separate share insurance fund for the corporates is needed, and look into exactly who uses corporates and what they use them for, she added.