It Depends What 'Member' Means

Unfortunately, Sarah Snell Cooke’s Oct. 7 column did not accurately reflect NAFCU’s position, the law or regulation in addressing alternative capital that might be provided by “members” of a credit union. When NAFCU first advanced its proposal on alternative capital, it recognized several key tenets, among them preserving mutuality. NAFCU’s original position (going back to 2001) never suggested, however, that capital provided by the “membership” should be limited to that of natural persons. In fact, both law and regulation are clear that the term “members” includes non-natural person entities. It goes without saying, therefore, that sources of alternative capital would obviously include non-natural person entities within a credit union’s membership, such as a sponsoring organization, its SEGS or, in the case of a community credit union, any entity within its field of membership. The basic tenet of mutuality, as reflected in NAFCU’s 2001 white paper, was further referenced in NAFCU’s and CUNA’s joint letter to then National Credit Union Chairman Michael Fryzel in November 2008, wherein NAFCU and CUNA agreed that “the not-for-profit, mutual, member-owned and cooperative structure of credit unions…(must be preserved while ensuring) that ownership interest remains with the members.” Alternative capital is a critical issue for the continued success and prosperity of credit unions. Recognizing this fact, NAFCU drew on the 2008 joint letter with CUNA to create and move forward a thoughtful legislative proposal that recognizes the industry’s current financial challenges while preserving mutuality and properly positioning our industry for the future. We look forward to working together with the NCUA to present a proposal to the U.S. Treasury Department and to Congress that can be enacted in the current Congress.