Seven Year Spread - NCUA Responds to Booking NCUSIF Replenishment

The NCUA just released a media advisory suggesting that they intend to seek congressional approval to allow credit unions to book the NCUSIF replenishment over seven years. This is certainly good news, and credit unions everywhere should follow the NCUA's suggestion of actively communicating with congressional leaders to ensure the required legislative changes are passed into law.

This does not, however, address the lack of transparency with regard to the WesCorp/US Central conservatorships. My fear is that credit unions, seeking to avoid a fight, will consider this seven year spread a victory and call it a day. We cannot let that happen if only because the relationship between the NCUA and the industry is in such poor condition. The complete breakdown of trust in the NCUA (as referenced in my earlier post today as well as by CUNA's Dan Mica and Callahan's Chip Filson) will make the entire regulatory and supervision process ineffective and potentially harmful.

I implore all credit unions to consider the NCUA's decision a blessing, but to not rest on the decision.

Closed-Door Transparency

A few weeks ago, two NCUA representatives went on camera at NAFCU and said that the industry needed to come together to save the corporate system. In fact they urged that industry cooperation was the only way to salvage the system. They indicated that every federally insured credit union, in the spirit of industry cooperation, would have to contribute even if that meant widespread negative earnings and potentially the sacrifice of hundreds of credit unions.

Let us all be clear on the definition of cooperation. It means the process of working together for the same end. What we have so far is not even close to cooperation. NCUA so far has not only failed to meet the specific definition of cooperation, they can't even claim to be working within the spirit of the definition. Just today they met in a closed-door session presumably to discuss how to further compel the industry to "cooperate" with their directives.

If cooperation is what they want, why the closed-door deliberations?

If cooperation is what they want, why not release the PIMCO details?

If cooperation is what they want, why not call together leaders of credit unions from around the country for town hall meetings?

If cooperation is what they want, why hide behind audio-based "webcasts" that spare them from seeing the true emotion their actions have stirred up?

I have talked to many credit unions, from New York to California, and the position each has taken is that the process that the NCUA has utilized in its corporate efforts is wrong. One credit union even likened the steps taken with regard to WesCorp specifically as taxation without representation. Back in the day, those words were enough to start a revolution.

This isn't cooperation. This is compulsion.

Perhaps a revolution is what we need. It is time to put right the relationship between the NCUA and the credit union community, and a peaceful yet forceful revolution may be the catalyst for long-needed change. The NCUA exists because of credit unions. Credit unions do not exist because of the NCUA. Last I checked, the NCUA came to being in 1970. Long before then the credit union community was, cooperatively, seeking to serve member-owners.

I am certainly not arguing for the NCUA to go away. I am not arguing that the US Central or WesCorp conservatorships should not have happened (after all, how would I know without any supporting data). I am not arguing that we should go back to the credit union community that existed in the 1960's. What I am saying, and what I firmly believe, is that we need to get back to a peaceful and intelligent, cooperative, relationship with the agency. That means that the agency must be true to its desire for industry cooperation, actually seeking to cooperate rather than mandating poor policy.

While I feel bad for the fine folks that work hard at WesCorp and US Central, many of whom I know personally and count as friends, this may be the best thing to happen to the industry in some time. NCUA, through its own efforts, finally forced into the sunshine the poor relationship that exists between itself the credit union community.

For the sake of 89 million Americans, this must be corrected.

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