March 25, 2009 10:40 PM
Sent To: ghyland@ncua.gov; mfryzel@ncua.gov; rhood@ncua.gov
Dear Chairman Fryzel, Vice-Chair Hood, and Board member Hyland,
I am writing you out of deepest concern for the credit union movement of which I have been a part for 23 years. It is evident in the events of the last week that the actions you have taken regarding the "restabilization" of the Corporate Credit Unions are not only not working, but are dangerous to the survival of the entire movement. The domino effect is already occurring and we are witnessing the toppling of the total structure.
On Friday, you put US Central and Wescorp under conservatorship. This required in turn, the impairment of all member capital in those two institutions, not to mention the additional impairment of all natural person credit unions' share insurance. For credit unions in California, this was devastating. For Corporate Credit Unions throughout the country, which had member capital in US Central, this resulted in a downgrading to E rating.
My accountant tells me that as a result of Members United's new rating, we must now impair our member capital in Members United. This on top of the 69% write-down of our NCUSIF shares will bring our capital to dangerously low levels. This is happening to credit unions across the country.
WIth hundreds of credit unions across the country becoming undercapitalized, we will see further strains on both the corporate system and the share insurance fund. THE NATURAL PERSON CREDIT UNIONS CANNOT AFFORD TO BAIL OUT THE ENTIRE CORPORATE SYSTEM. This is the inevitable endpoint of the path the NCUA Board is taking. We are no longer in a hypothetical world of "what-if's" and "then-whats?" The system is crumbling before our eyes.
I beseech you to request funds from the Federal government to cover these losses, rather than make it a burden that the natural person credit unions must bear. Because we cannot bear it. My credit union, Lower East Side People's FCU cannot bear it, but neither can thousands of others, both large and small. The ultimate victims will be our members, who have had faith in us as we have had faith in them.
I know I speak for thousands of others in the credit union movement when I say that I will call my Congresspeople night and day if that's what it takes to get this funding. We cannot sit by and watch the destruction of our credit unions.
In cooperation,
Linda Levy
Linda Levy
CEO
LESPFCU/PCEI
37 Avenue B
New York, NY 10009
212.529.8197 x20
