WASHINGTON (9/29/09)—The Credit Union National Association (CUNA)has reached out to the National Association of Federal Credit Union (NAFCU) in an effort to work together to obtain alternative capital for credit unions. Following the adoption of a resolution by the CUNA board at its most recent meeting in Estes Park, CO, the CUNA board and President/CEO Dan Mica have directed CUNA staff to work with NAFCU on this key issue. CUNA has reviewed draft legislative language from NAFCU and determined it is a good first step toward gaining additional sources of capital for credit unions. However, CUNA has suggested modifications to make the member-only alternative capital legislation as broad as possible, while being consistent with the principle of mutuality. In a memo to NAFCU, CUNA suggested that the legislative proposals be modified to include a number of additional sources for credit unions, including:
* Government assistance, including TARP funds; * Credit union assistance to other credit unions; * Credit union sponsors and select employee groups (SEGs) should be able to provide capital as members of a credit union, including those who have set out to make credit union access available to their employees as an employee benefit; and * There should be exceptions to capital rules for extenuating circumstances – such as in exigent circumstances to help prevent credit unions from going into costly conservatorship or liquidation.
"The modifications CUNA is recommending to the suggested legislative proposals are aimed at helping as many credit unions as possible. We look forward to working with NAFCU on securing alternative capital,” CUNA General Counsel Eric Richard said Monday. CUNA underscored in its communication to NAFCU that, in the long term, credit unions must be allowed to determine for themselves, based on their needs and membership, whether that capital should come strictly from membership or other sources. Drafting a legislative plan is just a first step in the pursuit of alternative sources of capital. The trades groups, once in agreement, will seek National Credit Union Administration backing of the plan. If that is secured, the groups will go on to pursue the U.S. Treasury Department’s support and then seek a sponsor on Capitol Hill.