NCUA Vice Chairman Commends Corporate Credit Unions for Vital Investment Role for Credit Unions and Announces Plan
for a Summit
on Credit Union Risk Mitigation
Alexandria, VA, May 31, 2006 – National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood announced during the recent Annual Meeting and Future Forum of WesCorp Credit Union, that he plans to call a summit of natural person and corporate credit unions to meet together and share a dialogue of the most current and sophisticated tools to mitigate balance sheet risks for credit unions of all asset levels and explore alterative investment opportunities.
The summit is planned for December, 2006.
In an address to over 300 senior credit union leaders, Vice Chairman Hood said the summit would include credit unions of all asset levels "whether it is a $10 million institution or a billion dollar credit union," said Vice Chairman Hood. "We must renew our focus on sustaining all of these not-for-profit financial cooperatives in the credit union system, while facilitating opportunities to mitigate risks and strategic partnerships for the continued growth and expansion of all financial cooperatives."
Recognizing that capital structure is a vital component to the long-term viability of all credit unions, Vice Chairman Hood expressed his strong desire for credit unions to realize a risk-based capital structure.
"I believe risk-based capital is the right approach at the right time for America's credit unions. I want to see a risk-based capital structure implemented for both natural person and corporate credit unions. However, it's clear to me that if NCUA is a proponent of risk-based capital, then we should be able to take the lead in the area which the agency has the statutory authority, and that is creating a risk-based capital structure of corporate credit unions. The ability to create such a system lies with the NCUA Board. I believe the positive track record of a risk-based system for corporates will aid potential legislative review for natural person credit unions."
"Make no mistake about it, safety and soundness is the basic tenet and our number one priority," said Vice Chairman Hood. "However, we should not misconstrue what an innovative approach to risk-capital will mean for all credit unions once implemented with the corporate system. Corporate credit unions are a vital investment vehicle for credit unions of all sizes, and I will encourage the NCUA to enhance the agency's investment pilot program to mitigate risks."
Vice Chairman Hood commended corporate credit unions for supplying liquidity and enhancing the ability of credit unions to serve their members. Additional details of the planned summit will be announced with the next few months.
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