PCA concerns raised in meeting with NCUA

WASHINGTON (10/1/01)--In a meeting last week with NCUA Deputy Director of Examination and Insurance Herb Yolles, CUNA staff had an opportunity to discuss their concerns about potential prompt corrective action (PCA) issues in the light of current rapid savings growth in credit unions.

The rule establishes net worth categories and establishes mandatory and discretionary actions that apply or potentially apply to credit unions that are in the undercapitalized category or below.

CUNA is concerned that as member savings build up, the resulting asset growth will produce falling net worth ratios. "All this could cause otherwise well-run, healthy credit unions to see a drop in their net worth ratios due to economic conditions far beyond their control," comments CUNA chief economist Bill Hampel. "That is why we're meeting with NCUA Board Members and senior staff now to encourage the agency to address this problem in a positive way and look for approaches that will not penalize well-managed credit unions."

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