With the fate of Fannie Mae and Freddie Mac up in the air, credit unions should pool their resources to create an alternative entity that can handle securitization and other functions currently fulfilled by the two government-sponsored entities.
That was the message from a panel discussion on the opening day of the American Credit Union Mortgage Association's Annual Conference in Las Vegas.
Rudy Hanley, president and CEO of SchoolsFirst FCU, Santa Ana, Calif., said he is concerned too many credit unions are waiting to see what happens to Fannie and Freddie–as options ranging from privatization to reform are discussed on Capitol Hill.
“We know this is a scale business so we need to act as a group,” Hanley said. “The opportunity is great for us, but we must have a plan irrespective of what happens to Fannie and Freddie. As credit union sizes grow due to mergers and other factors, there is an opportunity for credit unions to create their own secondary market.”
Kirk Kordeleski, president and CEO of Bethpage FCU, Bethpage, N.Y., noted several credit union organizations are looking into the concept of a CUSO or other entity handling secondary market functions, including CUNA and NAFCU. “We need to come together and figure out what we want. We need $1 billion in flow per quarter to create a secondary market.”
John McKechnie, former director of public and congressional affairs at NCUA and currently an SVP with Washington, D.C.-based governmental affairs firm Total Spectrum, said all regulators have become extremely risk averse in the wake of the financial crisis.
“Everybody is looking to avoid overconcentration," he said. "It is important for credit unions to participate in the regulatory comment process, but also keep in touch with Congressional representatives. The best avenue is to contact Congress, which can influence regulators.”