The financial loss that natural person credit unions experienced as a result of the corporate crisis was unprecedented. It shook the industry to its core, and it left many questioning the failure of high paid corporate executives to effectively do their jobs as well as the failure of the federal regulator to do theirs. These circumstances led to a loss of confidence and trust, creating a chilling effect on the future of corporate credit unions.
When the decision was made to conserve U.S. Central Corporate FCU and Western Corporate FCU in March 2009, some doubted whether that action need be taken and some doubters to this day believe they were right. Let's set the record straight: without question, every one of the five corporates NCUA conserved needed to be. The actions of the corporate offices and directors could not go ignored nor could the losses be swept away. Conserving those entities was the right and only action to be taken.
Individuals far more knowledgeable about credit unions, finances and investments than I, whose judgment and opinion I respect — even when they challenged the actions taken during the crisis — today admit those actions, along with the steps put in place for a recovery, avoided a potential disaster for the system.
The creation of the Temporary Corporate Credit Union Stabilization Fund (TCCUSF), the use of the good bank/bad bank concept to create bridge corporates and establish a system to hold the NCUA guaranteed notes (NGN) were important steps to stabilize the system. With the help of a growing economy the value of the NGN investments have increased and put the TCCUSF in an excellent financial position. Assessments have stopped and reimbursements may be possible when the fund is closed.
But questions have now been raised about the true value of the NGN investments. There has been a claim that NCUA's TCCUSF audit numbers do not align with the financial statements of the five corporate asset management estates and the schedule of the NGN.
Some argue that it is a comparison between apples and oranges and therefore arriving at a balance between them is not relevant. They say that the sets of figures presented are accurate and each is just a different way of looking at the whole picture.
So let's give everyone the benefit of doubt and agree that there are different ways at looking at a set of numbers at a certain period of time. Having done that, let's get to the bottom of the controversy and lay out all the numbers for everyone to see. Only NCUA can make this happen.
We continually hear NCUA use the words "transparency" and "full disclosure." However, if one cannot understand what is being disclosed, further explanation is needed.
The issue at hand is too big not to command NCUA's immediate attention. It involves the nickels, dimes and dollars of CU members across the country. It is time for the board to demand full accountability. In doing so, they must contract for an independent and complete review of every instrument, every report and every number.
Apples and oranges go well together in a fruit salad but fall short when put in a pie together. On this issue they must be kept separate.
Michael E. Fryzel is an attorney and consultant to the financial services industry with offices in Chicago. He is a former chairman of the National Credit Union Administration and board member. He can be contacted at: