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Federation Meets with NCUA to Address Examinations Practices and Access to Capital
(November 12, 2009 - Washington, DC) Regulatory relief and enhanced access to capital dominated the national policy agenda that National Federation of Community Development Credit Union (Federation) leaders brought to the nation’s capital throughout a series of meetings on November 12 with the National Credit Union Administration (NCUA) and the U.S. Treasury Department, Community Development Financial Institutions (CDFI) Fund.
The Federation’s delegation included Board Chairman Randy Chambers, CFO of Self-Help CU (Durham, NC); former Board Chairman Eunice J. Rogers, CEO of NRS Community Development FCU (Birmingham, AL); Governmental Affairs Committee Chairman Deyanira Del Río, Board Chair of the Lower East Side People’s FCU (New York, NY) and Governmental Affairs Committee members Helen Godfrey-Smith, CEO of Shreveport FCU (Shreveport, LA) and Shirley Spruill, CEO of Renaissance Community Development FCU (Somerset, NJ); as well as Federation President/CEO Cliff Rosenthal.
“The credit union movement, and CDCUs in particular, are under intense stress,” said Mr. Chambers. “It is imperative that CDCUs have increased access to resources and a supportive regulatory environment to survive and grow.”
Discussions held with NCUA ranged broadly, from examination practices, to “whistleblower” protections, to regulations restricting CDCU access to capital.
For more information about this meeting, please click here.
Corporate Credit Union Stabilization Program
The National Credit Union Administration (NCUA), which regulates all federally-insured credit unions, has proposed a self-funded bailout of corporate credit unions, which will force every credit union in the nation to invest 62 basis points of their total assets to protect the liquidity needs of the corporate credit union system. While this plan highlights the credit union system's willingness to correct itself cooperatively and without additional cost to American taxpayers, the result of the mandatory investment will be devastating for many small CDCUs.
The fallout from the economic downturn, coupled with the lack of capital, will result in a rapid reduction in community wealth, and for CDCUs, a crippling loss in earnings. We fear these challenges could permanently shutter dozens of CDCUs nationally.
In order to advocate effectively for the needs of our member institutions, we are trying to identify the extent to which this will impact CDCUs. We encourage CDCUs and low-income credit unions to submit any materials, which highlight the scope of impact this measure will have on your credit union and your community. Below is a sample letter sent to the Treasury Department and NCUA from Saguache County Credit Union CEO Rick Wertz. This is a great example of the type of information we need in order to advocate for the needs of CDCUs in this difficult tim
To learn more about this issue, and for resources to take action, please click here.
Community Development Revolving Loan Fund
As part of our efforts to help CDCUs survive the current economic downturn and strengthen their services to low-income members, the Federation has requested that NCUA amend the regulations of the Community Development Revolving Loan Fund (CDRLF) to permit the issuance of secondary capital loans to low-income designated credit unions, which will enable them to:
- Maintain and expand their services in distressed communities
- Increase their regulatory net worth
- Avoid Prompt Corrective Action (PCA)
- Minimize the need for mergers and liquidations
- Provide an additional layer of financial insulation tothe National Credit Union Share Insurance Fund
Low-income credit unions have the unique power to obtain secondary capital loans that count toward minimum net worth requirements (recognized by statute in H.R. 1151, CUMAA). The CDRLF should shift from providing liquidity deposits and loans to providing secondary capital loans. This action will provide a source of vitally needed net worth to low-income credit unions, helping to ensure that they can maintain or expand their role in revitalizing their communities, which was the Congressional purpose in creating the CDRLF.
No statutory action or additional appropriation is required to make this change in the CDRLF. It may be implemented through regulatory action by NCUA. Because of the unprecedented emergency facing the credit union movement, NCUA can and should make the necessary changes on an urgent and expedited basis.
To view our letter to NCUA and our impact analysis on the effects of this change on CDCU survival, please click here.
Past Advocacy
To learn more about the Federation's NCUA advocacy initiatives over the past several years, please click on the corresponding links below.
