Date: 1982-12-15
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Speaker. this week. the news media has carried some inforniation apparently released from an examination of the National Consumer Cooperative Bank. As long as this information is being made public. it is important that the Banks release of data be complete enough to reflect accurately the import of such documents as the Farm Credit Administrations examination report. The report. in my judgment. is a serious matter for the Bank and one which requires decisive. quick. remedial action. I have informed the Banks Board of Directors that it should make immediate corrections of the deficiencies noted by the FCA. I have received assurances from the Bank that remedial steps are being considered. At this stage promises outnumber definitive actions. The material released to the press emphasizes the estimates of the ultimate losses from bad loans2 percent of the title I portfolio and 27 percent of the title II portfolio. While it had not been my plan to release the FCA report. I think it now becomes important to place these numbers Ia. the context of the overall tone of the report. If the report is to be dismissed. it is significant to note that nearly 25 percent of the portfolio is identified as nonperforming at the date of the examination. The number of classified loans was unacceptably high. It is very true that the Congress did not give the Bank an easy set of assignments. and that it must face some situations that commercial banks are able and willing to ignore. However. it would be an extremely serious mistake if this rationale was used to cover deficiencies. As the FCA report states: Although the poor quality of the Banks loan portfolio may have resulted partly from a business and lending philosophy deliberately formed with a greater tolerance for risk than was acceptable to conventional lenders. the causes more easily discerned by the examiners were deficiencies in organization and in the capabilities and performance of credit staff. It is also true that the Bank was born under difficult circumstances and that it was forced to expend much of its energy to fend off the absurd vendetta of the Reagan administration in 1981. None of us should underestimate the extreme pressures placed on the Bank by its political enemies. Nonetheless. the Bank must operate in a prudent and efficient manner. Clearly. it must if it is to carry out its mission and be able to raise funds in the marketplace. It must be structured and operated so that its "outreach" capabilities are brought into play and so that full potential of consumer cooperatives is realized. Happily. the majority of the Banks original capital is unimpaired. It is in a position to correct its earlier mistakes. to reorganize and to retain the confidence of the broadbased coalition which made the legislative effort a success. At the moment. the Banks President. Carol Greenwald. is on a sabbatical and her present contract with the Bank expires on January 31. For the past several months. the Bank has issued a number of limited and ambiguous statements concerning the status and plans for the chief executive officer. I would suggest to the Bank and its Board of Directors that there be an early and definitive public statement about the future plans for the most important position at the Bank. Anything less does a disservice to the institution and the cooperatives which own and support the Bank. One of the items on this committees agenda for the next Congress will be a full and open hearing on the National Consumer Cooperative Bank and the various examinations and studies now being carried out by the FCA and the General Accounting Office. We will be looking for the changes and corrections that truly suggest that the Bank understands its responsibility under its charter and that it is fully responsive to its shareholders and the consumer cooperative movement. I am certain that the Bank and its Board will understand that promises will carry much less weight with the committee than actions.e