During a recent dinner conversation with a couple of fellow cooperators in
, the topic turned to corporate credit unions. There’s no denying it, corporate credit unions have to be one of the hottest topics within the credit union community. Washington, D.C.
Ever since March of 2009 when the National Credit Union Administration (NCUA) took U.S. Central and WesCorp into conservatorship, corporate credit unions have dominated the headlines like never before. NCUA’s actions prompted the entire credit union industry to take a much closer look at all the corporates, eventually leading to a deeper scrutiny of the management and composition of their investment portfolios. The exercise continued further to include review of their value in comparison to other providers, their structure, organization, and their role within the credit union system. Today, a number of leagues are hosting executive committees to evaluate the role of corporates and how they might be structured going forward, that is, if there can even be a future for them within the framework of the revised corporate rule.
However, in retrospect, suppose there was a different process in place for stepping in to rectify the failing organizations? Suppose the insurance fund resided in the hands of credit unions and credit unions themselves were authorized to remedy the situation before it was passed over to the regulator as a final backstop?
OK, I realize that to operate as a legitimate financial organization in the
, there are federal and state rules governing how the organization is structured and allowed to operate. But just suppose with me that the equation was different. United States
Suppose NCUA only existed as the last resort and it was left to the credit union system to have the first crack at resolving the crisis. How would a course of action by the credit union community differ from that exercised by the NCUA? Would it differ or would we all be out of jobs at this point in history?
When one considers the cooperative business model and what it requires of those who are engaged in it as owners, one has to wonder how credit unions might handle such failures if the responsibility resided first in their hands.Is such a reality even possible?