By Frank J. Diekmann
Now would be a good time for NBC to introduce Law & Order: The Corporate Credit Union Stabilization Fund.
OK, I’ll concede it may lack some of the buzz and allure of the seemingly endless Law & Order franchises, such as Special Victims Unit, Criminal Intent, Trial by Jury, and the upcoming Law & Order: Menendez Brothers, but for credit unions a good investigation related to the Corporate Credit Union Stabilization Fund and, especially, a dramatic courtroom scene where all sides get to present their arguments, would draw big ratings.
First, to get you in the mood, go here and hit play.
Like a scene ripped right from the Law & Order formula, we open with what seems to be a clear-cut case: credit unions paid hundreds of millions of dollars into the Corporate Stabilization Fund after the death (or was it suicide?!) of five corporate credit unions a decade ago, and were told they wouldn’t see a dime in return—if they ever saw it at all—until 2021 at the earliest. But like a new clue in a cold case, suddenly credit unions are told they may start seeing refunds in 2018. Cut to a Law & Order formulaic tactic as the government puts on a powerful closing argument and we get a close-up of a unanimous jury as it finds in favor getting the money back—except that it isn’t unanimous!
Go here again.
As CUToday.info reported here, not everyone is convinced that starting to pay out money from the Corporate Stabilization Fund early is a good idea. CUNA and NAFCU have taken opposing positions on NCUA’s proposal to shutter the TCCUSF. CUNA says it fully supports NCUA’s plan. NAFCU said it doesn’t believe closing the TCCUSF and merging it into the National Credit Union Share Insurance Fund at this point would be in the best interests of CUs.
Two Divergent Views
“CUNA’s number one priority is to ensure credit unions get their money back in 2018, no later, and we will advocate to ensure nothing slows down the process," said CUNA President/CEO Jim Nussle. "We engaged throughout this process with members of our Examination and Supervision subcommittee, leagues and CUNA member credit unions, and feedback has been consistent that refunds should be given to credit unions as soon as possible.”
NAFCU is contending that the agency is “rushing” forward with a “complex proposal,” and furthermore is attempting to “distract credit unions with the promise of dividends as it hoards nearly $800 million for itself by increasing” the Normal Operating Level of the Share Insurance Fund “to the highest level in the history of the SIF."
NAFCU President and CEO Dan Berger, in the trade association’s comment letter, asserted that if NCUA moves forward with the current proposal, credit unions would only receive about 40% of what is "rightfully their money." He called it a "cash grab" and said it amounts to a "60% premium charged to the industry."
But just before we go to commercial, hold on, as CUNA said in its comment letter to NCUA that it will work closely with the agency as the process of winding down the corporate stabilization fund moves forward, and that "the corporate crisis is over and the purpose of the stabilization fund has expired. There is no argument to be made that NCUA is a better steward of these resources than credit unions.”
Who's Right?
Who’s right? Cue the courtroom scene where (in an ideal world) the two sides get to argue their cases.
This is a complex issue and the jury is going to need some time to sort through it all. What’s amazing, concerning, interesting and fascinating in this case is that the two expert witnesses, CUNA and NAFCU, have come to such different conclusions after reviewing the very same evidence and consulting with the exact same constituencies–their member credit unions, which largely overlap. As investigators will tell you, you really can’t count on eyewitness testimony as being entirely reliable. I mean, who hasn’t seen the compelling case made by the documentary My Cousin Vinny?
Just what is the “normal” operating level of the NCUSIF? Are credit unions sacrificing long-term returns by grabbing at a short-term stack of cash? Has NCUA been as “transparent” as it could be? Although CUToday.info will be providing additional reporting, it’s unfortunate there isn’t a forum for this debate other than the upcoming NCUA board meeting on Sept. 28. The two-judge panel in this case, Chairman Mark McWatters and Board Member Rick Metsger, seem to be leaning toward toe-tagging the TCCUSF and paying out some of the estate.
And, why wouldn’t they? Who doesn’t want to be remembered as a Washington/government official who gave money back?
Is it a “cash grab” or a well-deserved, long-awaited refund? It would be worth sitting through all the commercials without reaching for the remote if we could wrap this up in an hour. Stay tuned. You’re just going to have to binge-watch.
And, one last time...
Frank J. Diekmann is Cooperator-in-Chief at CUToday.info and can be reached at Frank@CUToday.info or @FrankCUToday.