Can CAMEL 3 Credit Unions Participate in Treasury's Emergency Capital Investment Program?




I have clients that are good candidates for Treasury’s Emergency Capital Investment Program.


They have asked me if their CAMEL code can impact being approved.


Here is the scoop:


The program does establish ineligibility of some credit unions and banks as follows:


INELIGIBILITY OF CERTAIN INSTITUTIONS: “An institution shall be ineligible to participate in the Program if such institution is designated in Troubled Condition by the appropriate Federal banking agency or the National Credit Union Administration, as applicable, or is subject to a formal enforcement action with its primary Federal regulator that addresses unsafe or unsound lending practices.’


What is meant by troubled condition? Per NCUA a “troubled condition” credit union is defined as:


A natural person credit union which has been assigned a composite CAMEL Code 4 or 5 by NCUA or the state supervisory authority.


Thus CAMEL 1,2, and 3 credit unions are eligible.


This is where I believe the “consultation with regulators” phase of the approval process will be key. Per the program:

“For each eligible institution that applies to receive a capital investment under the Program, the Secretary shall consult with the appropriate Federal banking agency or the National Credit Union Administration, as applicable, to determine whether the eligible institution may receive such capital investment.”


I expect CAMEL 3 credit unions to face more scrutiny from NCUA than 1’s and 2’s. If I was a CAMEL 3 and hoping to get approval for funding I would be communicating with my examiner NOW about the credit unions plans and needs for the fund. Once the fast and furious process of evaluating all credit unions and banks that applied begins, you will want to make sure that your examiner is already fully engaged and understanding of your needs for the funds and why you are a good candidate because of what you do for your members.


Good communication efforts can only enhance your likelihood of approval.


Here is a link to the current draft of the application program… lets hope Treasury gets the final process established soon… as they are already late…


https://home.treasury.gov/system/files/136/ECIP-Instructions-and-Materials-Early-Release-Draft_0.pdf