The NCUA board’s decision in late September to retain billions in credit union’s money for itself when it merges the Temporary Corporate Credit Union Stability Fund (TCCUSF) and the National Credit Union Share Insurance Fund (SIF) has raised fundamental questions about the viability of an independent cooperative system in America.
Chip Filson On The NCUA
Read Chip Filson’s detailed analysis of the NCUA’s flawed reasoning and realities in its decision to retain billions while returning to credit unions only millions as it merges the corporate bailout fund into the share insurance fund. Filson is Callahan chair and a former NCUA executive who was instrumental in the 1980s redesign of the insurance share fund with cooperative concepts.
The NCUA’s diversion of member money was not about the safety and soundness of the NCUSIF rather, it confirmed the continuing inability of the agency to heed the fiduciary responsibilities for cooperative management of common wealth that provides the foundation of the credit union system.
It also could easily lead to further blurring the lines between banks and credit unions in the minds of those who don’t understand the importance and special purpose of member-owned, not-for-profit financial institutions.
The future of financial cooperatives, first promoted nationally during the depths of the Great Depression, has never been about their financial viability (after all they begin with no capital), but whether the concept of member-ownership and stewardship of common wealth can be sustained in a society that worships private ownership and capital markets. ContentMiddleAd
Among the reasons the credit union community is deeply disappointed and concerned:
- The core issue: The NCUA took credit union money for one specific purpose and diverted it to another. In doing so, the board ignored the Federal Credit Union Act, distorted the forward viability of the share insurance fund, and failed to apply obvious lessons from the most-costly liquidations ever in credit union history.
- The dashed hopes that NCUA board chair Mark McWatters was attuned to the needs of and receptive to credit unions’ points of view. Instead of draining the swamp, this first major board action just confirmed the worst instincts of government to spend resources on itself rather than return funds to their rightful owners.
- Credit unions have done the math. The average credit union of $240 million in assets would receive almost $500,000 in refund assuming the initial cash of $2.4 billion was distributed in full. The recent hurricanes and California fires show the need for special initiatives to serve members now. Credit unions want to invest to promote financial health initiatives, to enhance data analytics, and invest in more services for their communities. This money now sits in overnight funds at the Treasury, waiting only for the next NCUA budget increase.
The board ignored filed comments which nearly unanimously (98%) were opposed to the merger as planned, stated after the vote that credit unions just didn’t really understand the issues, and did not even acknowledge the request that corporate bailout fund recoveries be accounted for separately within the SIF to track performance of the merged assets.
So, now is the time to act.
- Willing to sign a letter of appeal of the board’s actions?
- Willing to share that letter with your congressman and state how you would use the funds?
- Willing to ask members to sign a common petition requesting that their funds be returned?
Let me know at firstname.lastname@example.org.