http://www.ncua.gov/news/press_relea.../MA09-0304.htm

Vice Chairman Hood Addresses Concerns of Natural Person Credit Unions During a Credit Union League Town Hall Forum

March 4, 2009, Alexandria, VA – National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood addressed the North Carolina Credit Union League’s Town Hall Meeting yesterday at Carolina’s Telco FCU in Charlotte, N.C. Mr. Hood took the opportunity to discuss and explain the recent action taken by the NCUA Board in an effort to stabilize the corporate credit unions. More specifically, the Vice Chairman addressed questions concerning the recent supervisory letter sent to all NCUA field staff that focused on supervision considerations for natural person credit unions in light of the announced corporate stabilization efforts.

“During these times of economic uncertainty, I feel that communication regarding the recent actions of the NCUA Board in an effort to stabilize the corporate credit unions is critical. I hope that other credit union’s throughout the country follow your lead and take a proactive approach to provide our Agency with ideas and feedback regarding the corporate stabilization plan,” said Hood.

Hood made clear that examiners must distinguish between the impact of the actions taken by the NCUA Board and the decisions made by the credit union’s management. The recent letter sent to examiners outlines their responsibilities in the following areas:

* Assessment of earnings
* Assessment of net worth
* Prompt corrective action and net worth restoration plans
* Due diligence
* CAMEL rating system

It is important to note that credit unions that have chosen to participate in the Credit Union System Investment Program (CU SIP) may temporarily experience a reduction in their average asset ratio and dilution of their net worth ratio due to additional funds on their balance sheet. However, such credit unions are voluntarily participating in this program and such actions are being taken to specifically address the larger market liquidity needs currently plaguing the credit union system. The results will allow natural person credit unions to continue safely supporting the corporate system by maintaining their current deposits and placing any excess liquidity in their corporate credit union. This concept of cooperation is the very foundation and nature of the credit union system.

The Vice Chairman went on to answer a myriad of questions regarding the impact of current legislation on their natural person credit unions. Recognizing the challenges posed by our current economy, Mr. Hood was able to look beyond the present and strike an optimistic tone for the future of the credit union industry…“There has never been a better opportunity for credit unions to demonstrate our mission of ‘People Helping People.’ This is your time to be bold, be heard, and be there.”

For a complete and detailed explanation of the actions concerning NCUA’s Corporate Stabilization Program, please visit: http://www.ncua.gov/CorporateStabilizationProgram.html

The National Credit Union Administration is the independent federal agency that regulates, charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund (NCUSIF), insuring the deposits of over 89 million account holders in all federal credit unions and the majority of state-chartered credit unions.

-NCUA-

Here is the "translation" of whats really happening from my Credit Union (PSECU)

http://www.psecu.com/moneychat/details.aspx?article=EQ

PSECU Gets Update on Credit Union Movement
Written by Greg Smith on March 6, 2009

I recently participated in the Governmental Affairs Conference (GAC) sponsored by Credit Union National Association. This annual gathering gives those of us in the industry a chance to take the financial pulse of the credit union movement. That pulse is strong, but there are concerns within the industry. The good news is that PSECU is very healthy and very stable.

To give perspective to the situation, I'll explain the organization of the credit union industry. "Natural-person" (or retail) credit unions, like PSECU, serve individuals. Corporate credit unions serve retail CUs - kind of like a credit union for credit unions. When retail CUs take deposits from their members they may make investments with those share deposits. By law, they may make only federally backed investments. Corporate CUs, however, have a broader authority to invest and are being hit by the economy harder than retail CUs.

Both corporate and retail CUs contribute to the National Credit Union Share Insurance Fund (NCUSIF). The National Credit Union Administration (NCUA) is taking actions in an effort to stabilize the corporate credit unions. What this means for healthy credit unions like PSECU is that we need to make a contribution to the NCUSIF to replenish the fund. Read the NCUA press release.

Just how much that contribution will be remains to be seen. We are carefully monitoring the situation and will take the actions needed so we remain healthy and stable.