Corporate Credit Union Stabilization Program

Following is the text from a letter written to the NCUA Board, addressed to the Chairman, about the Proposed Corporate Credit Union Stabilization Program. We must make every attempt to mitigate the severe negative impact this Program will have on Credit Unions.

Thank you for the opportunity to comment on the NCUA’s current ANPR on the Corporate Stabilization Program. I have discussed the proposal with a number of colleagues and listened intently on a conference call yesterday, conducted by the Credit Union National Association. With the uderstanding that there may be some minor legislative changes necessary, I’d like to suggest that the Agency consider the following points brought forth by a respected colleague:

Place US Central Credit Union into Federal Conservatorship, immediately, and do the following:

1. Charter a New US Central Federal Credit Union and appoint new officials (professionals and volunteers).

2. Authorize the Central Liquidity Facility to borrow money on their existing line of credit from the US Treasury in an amount needed to purchase all of the US Central Credit Union’s investments at book value. This assumes that the investments were AAA rated when purchased, are performing and will pay par at maturity.

3. Give the present US Central Credit Union one year in conservatorship to let its natural person credit union members find new vendors or other Corporates to provide those services presently available from US Central.

4. After one year liquidate the present US Central CU. Let all of the reserves, if any, remaining when US Central liquidates be transferred to the new US Central Federal Credit Union.

5. The New US Central Federal Credit Union holds their purchased securities (from US Central Credit Union) and allows them to mature and be redeemed. If the NCUSIF pays the New US Central Federal Credit Union’s operating expenses, its balance sheet will consist of cash, investment and notes payable to the CLF.

6. The New US Central Federal Credit Union simply ignores the AICPA’s various FASB rules. It will be a government owned and operated facility. As such, it does not need a Certified CPA Audit.

7. Once The New US Central Federal Credit Union has “cashed in” all of the investments at their maturity then determine a final loss, if any. Natural Person Credit Unions would then either pay the deficit, after enjoying the time value of money for years; or NCUA could charge a premium on an annual basis starting immediately; or charge the loss to the NCUSIF and bill additional premiums. We believe each of these options will be less costly than the current proposal.

Thank you for your time and consideration.

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