Soon, it will become evident the credit union industry is critically undercapitalized. NCUA and independent analysts estimate credit unions are facing losses in the $15 billion to $50 billion range. With only $100 billion in capital and stagnant earnings, recognizing these losses will dramatically limit the ability of the industry to serve its members and the community.
The unfiltered, mathematical reality is that there is not and will not be sufficient self-generated capital to solve the problems caused by the breadth of corporate and natural person credit unions failures without reducing all credit unions to the lowest common denominator. Through mergers and assessments, NCUA continues to require healthy credit unions to absorb the losses of the weaker. For many, this interdependence is both conflicted and unfair.
Moreover, the impact redefines a credit union; inconsistent with the constitution of a cooperative. Nowhere in the cooperative world (mutual savings banks included) can the member owned capital of one cooperative be siphoned off for use by another cooperative without an affirmative membership vote; agriculture cooperatives, consumer cooperatives, housing cooperatives, wholesale buying cooperatives, and utility cooperatives included.