Magazine article American Banker

CUNA Writes Plan to Monitor Compliance of Corporates with Its Investment Criteria

Magazine article American Banker

CUNA Writes Plan to Monitor Compliance of Corporates with Its Investment Criteria

Article excerpt

The industry's largest trade group has drafted a plan that would let it monitor how the industry's liquidity centers invest credit unions' money. But at least some corporate credit unions are calling the idea a power grab.

The Credit Union National Association, spurred by the collapse of Capital Corporate Federal Credit Union, wants to certify those corporates that operate as matched-book, "absolutely safe" liquidity centers. "We are not trying to preempt the National Credit Union Administration and Congress as they review the need for additional controls on the corporate network," CUNA president Ralph S. Swoboda wrote in a draft of the proposal. "Nevertheless, we believe (we) have an independent obligation to monitor corporate credit union safety and soundness."

Under the plan, which is still being developed, the trade group could decide to set up a seven-member committee that would establish investment criteria for corporates. Institutions that comply with the guidelines would be assured of being bailed out by other corporates if they run into problems. Corporates that don't comply would be on their own. The committee would monitor the corporates to make sure they were complying. If a corporate breached the standards, its certification would be lifted.

CUNA's proposal has split the corporates.

Opponents argue that the trade group is trying to extend its influence over corporates in the wake of an NCUA rule that will end shared management between the association and the liquidity centers. …

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