U.S. District Court Dismisses NCUA's Lawsuit Against Barclays

Barclays Plc won the dismissal of a NCUA lawsuit over the sale of more than $555 million of mortgage-backed securities to two failed corporate credit unions.

U.S. District Judge John Lungstrum in Kansas City, Kansas said the National Credit Union Administration waited too long by not filing its complaint until September 25, 2012. The deadline was March 20, 2012, three years after the NCUA had been named conservator of the U.S. Central Federal Credit Union and the Western Corporate Federal Credit Union.

Read the story.

American Consumer Council

Almost fifty credit unions are allowing anyone to join them through the American Consumer Council (ACC).

These credit unions have partnered with ACC for the express purpose of qualifying individuals, who otherwise are ineligible, for credit union membership. In fact, some credit unions blatantly advertise on their websites that if you are not eligible to join through any of the listed groups or affiliates, you can join through ACC.

It appears that ACC was added to these credit unions’ fields of membership via the associational common bond. However, on ACC's website, it states that “if your intention is to join one of our participating credit unions, or if you are already a member of a credit union, you can join for free! (emphasis added)”

While ACC is an association, the absence of dues seems to make it more difficult for the associational common bond requirement to be satisfied.

Membership in ACC needs to be more than the checking of a box on a credit union’s membership application. There needs to be a meaningful affinity and bond among ACC members so as to satisfy the associational common bond requirements.

This is just another instance of permissive credit union regulators permitting some credit unions to stray from their charter.

H.R. 2572 Would Authorize Equity Instruments

Representative Gary Miller (R - CA) introduced a bill (H.R. 2572) that would allow credit unions to issue equity capital instruments.

The bill would amend the definition of net worth to allow components of equity under generally acceptable accounting principles (GAAP) not included in retained earnings to count towards net worth.

Below is the specific language.

(2) NET WORTH.—The term ‘net worth’—
A) with respect to any insured credit union, means the retained earnings balance of the credit union, as determined under generally accepted accounting principles, together with—
(i) any amounts that were previously retained earnings of any other credit union with which the credit union has combined; and
(ii) components of equity under generally accepted accounting principles not included in retained earnings, as determined by the Board;

In an April 2010 report, NCUA's Supplemental Capital Working Group identified two instruments, voluntary patronage capital and mandatory membership capital, that could count as equity under GAAP.

In addition to these two instruments, the Board could include other comprehensive income as a part of net worth.

Jamaican Junket

CUNA's Volunteer Institute will meet next January in Montego Bay, Jamaica.

The conference will span 4 days and will be held at Hilton Rose Hall Resort & Spa. CUNA is advertising an all inclusive room rate of $289 per night for a single room or $341 per night for a double room.

While most credit union directors are not paid, they are handsomely rewarded with all expenses paid perks, such as conferences on a tropical island.

Lynrocten Federal Credit Union Update

The New & Advance is reporting that almost two months after NCUA seized Lynrocten FCU of Lynchburg, Virginia, 179 accounts with a collective balance of about $7 million are awaiting resolution and repayment as investigators look into loans members say they did not take out.

A NCUA spokesperson stated that another 1,500 accounts have been paid in full.

At the time of its closure, Lynrocten had 1,068 members and $13.8 million in assets.

Read the story.

PEF FCU Closed

The National Credit Union Administration (NCUA) today liquidated PEF Federal Credit Union of Highland Heights, Ohio.

Best Reward Credit Union of Brook Park, Ohio immediately assumed certain PEF Federal Credit Union members, shares, assets and liabilities.

NCUA placed PEF into conservatorship on June 21, 2013 and made the subsequent decision to liquidate PEF and discontinue its operations after determining the credit union had no prospect for restoring viable operations. The credit union reported a delinquent loan ratio of 10.59 percent and net charge-off ratio of 6.17 percent at the end of March 2013.

PEF served 2,974 members and had assets of approximately $31.3 million.

PEF FCU is the 11th credit union to be liquidated this year and the first Ohio credit union to fail, since G.I.C. FCU on December 13, 2012.

Read the press release.

HarborOne Transitions to a Co-operative Bank Charter

HarborOne Credit Union's conversion to a Massachusetts co-operative bank is officially complete.

The credit union will operate under the name HarborOne Bank starting today.

The institution recently received regulatory approval for FDIC insurance and in April the National Credit Union Administration notified HarborOne that it complied with the requirements of the NCUA's conversion regulations.

HarborOne will be with largest co-operative bank in New England, with $1.9 billion in assets.