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.

A Stabilizing Punch in the Face

I just returned from a credit union planning session. One of the topics of discussion was how much of an impact last week's NCUA decision on the "stabilization" efforts of the corporate credit union system would have on the industry's future. The concern this credit union shares with credit union leaders across the country is that the NCUA is destabilizing natural person credit unions with their corporate rescue efforts. 

A widely held perspective in the circle of clients we support is that hundreds of credit unions will be driven to untenable financial positions if this plan is enacted. That every corporate credit union will "survive" while 500 credit unions are driven out of business. 

It is certainly too soon to tell if this ill-conceived plan will have such consequences. Perhaps they will revise the plan with something a bit more sensible, though I have my doubts. Unfortunately, every credit union that spent the fall deliberating deeply on the most sensible pathway through this downturn just had their well-devised plans dealt a blow. 

I suppose that Mike Tyson is worth quoting here. He apparently once said "everyone has a plan . . . until they get punched in the face." Well said Mr. Tyson. Well said.