Special Report: Corporate CUs
Credit Union Journal | Monday, August 9, 2009
With most corporate credit unions operating with little to no capital and NCUA gearing up to unveil new rules later this year that could create a totally new business model for them, this week's special report looks at the corporate meltdown and asks how did we get here, what led to all of this, who is to blame, and what might be on the road ahead?
Harmon Takes Over At Corporate Trade Group
Credit Union Journal spoke with industry veteran Brad Miller about leading the Association of Corporate Credit Unions during what will certainly be one of the greatest periods of re-structuring and change.
Canada's Centrals Could Offer Up A Blueprint For U.S. Corporates
LAS VEGAS-U.S. credit unions wrestling with the future structure of their corporate CUs might want to look north of the border for some examples to consider.
New Business Model For Corporates Must Emerge
LAS VEGAS-This much is certain: Corporate credit unions will operate with a much-different business model in the near future.
Breadth Of Bubble Stunned The Pros
WEST PALM BEACH, Fla.-Even asset managers who were predicting a decline in housing were stunned by the downturn that eventually ensnared corporate credit unions' balance sheets.
Legacy Asset Plans Are The Big Worry, Says Exec
LAS VEGAS-Moving forward, corporates will need to focus on two things: effectiveness and efficiency. That's the view of Brad Miller, CEO of Southeast Corporate FCU in Tallahassee, Fla., and the former president of the Association of Corporate CUs for the past four years.
Most Agree Blame For Corporate Failures Goes Far Beyond NCUA
BIRMINGHAM, Ala.-Blaming NCUA for the problems that befell the corporate system is easy to do, agree those within and outside the corporate network.
Awaiting The Final Rule
ALEXANDRIA, Va.-The critical issue now for many credit unions, corporates and other observers is what form will the final NCUA corporate rule take, and when will NCUA release the overhaul to Part 704 of the FCU Act.
Lack Of Collaboration A Problem
PHOENIX-It wasn't just the economy that chopped down some of the largest corporate credit unions. They can thank their desire to become large, and their lack of collaboration and competitiveness.
'Abysmal Performance' Unforgivable
IRONDALE, Ala.-The failure of, and ongoing losses by, many of the corporate credit unions can be attributed to arrogance on the part of CEOs and boards from some of the biggest corporates, which played a role in the high concentrations in securities that contained risk, asserts Thomas Bonds.
'At The End of the Day,' No One Really Knew
PHOENIX-There was no way to avoid being caught up in the mess, is how FirstCorp CU EVP and CIO Greg Harden summed up plight of most corporate credit unions.
'Co-op Structure Hurt Analytics'
SCOTTSDALE, Ariz.-While some clearly point to the rating agencies as culprits, Bill McGuire sees corporate staff-the investment teams and leadership-as deserving of a great deal of the blame.
Natural Person CUs Also Share Blame, Says Becker
WASHINGTON-While corporate credit unoins must accept their share of the blame for blindly investing their funds into US Central, which loaded up a significant portion of its mortgage investment portfolio with certain securities, it should be noted that natural-person CUs did the very same thing, reminded NAFCU President Fred Becker.
Faith In A Recovery That Never Came Just 1 Of Many Wrong Assumptions
WASHINGTON-Asset managers at corporate credit unions dutifully relied on past experience and rating agencies when buying securities during the bubble earlier this decade. But product innovation and a change in the mortgage market dynamic ultimately spelled disaster for many institutions, noted one analyst.
Factors Leading To Corp Failures Began Long Before Mortgage Collapse
NEW YORK-The collapse of the housing market bubble is largely credited with creating most of the losses corporate credit unions, and their natural-person CU investors, have reported.
Corporates' Losing Wager Made Worse By Lack of Effective Hedging Strategies
LAKE BLUFF, Ill.-Corporate CUs are in trouble because they made a bet that did not pay off, and they failed to hedge their wager.
State Regulators Hope Crisis Brings About More 'Reality-Based Regulation'
LANSING, Mich.-Board members and senior management are responsible for what happens to their institutions, but state regulators aren't completely laying the blame for losses that damaged so many corporate credit unions at their feet.
Analyst: CUs Can't Afford $17B Cost To Bail Out Failed Corporates
LAKE BLUFF, Ill.-It's going to cost natural-person credit unions $17 billion to bail out the corporates, a price tag that could cripple the CU movement if NCUA continues with its annual assessments.
What A History Lesson In Corporates Means For Future
LAS VEGAS-What goes around, comes around, especially when it comes to corporate credit unions and crises. But this most recent crash of many of the corporate CUs ultimately will have to break that cycle, according to one person, who has a long history working with credit unions through various meltdowns and problems.
How One Corporate Got Back Into The Black
Credit Union Journal recently asked Corporate One CEO Lee Butke to outline the actions his CU has taken over the last three years that helped it mitigate losses.
Why Two Groups Declined Comment
Among those who declined comment during the course of assembling interviews for this special report on corporate CUs were CUNA Mutual Group, Madison, Wis., which has built a large investments operation, and NCUA.
