Mon, Oct 2, 2017
Both members of the NCUA Board voted Thursday to merge the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) with the National Credit Union Share Insurance Fund (NCUSIF) Oct. 1, and set the Normal Operating Level at 1.39 percent from 1.30 percent. The stabilization fund had been scheduled to close in 2021.
Based on feedback from our member credit unions, the Association supported closure of the Stabilization Fund. However, in the comment letter submitted to the NCUA, the Association urged the NCUA to reconsider its plan to raise the Normal Operating Level and take into consideration the real-world impact of the higher operating level, and opt to continue premium assessment practices when necessary.
During today’s meeting, the NCUA indicated it’s projecting a distribution of $600 million to $800 million in excess equity to insured credit unions from the Share Insurance Fund in 2018. Additional distributions of $600 million to $1.1 billion in total are possible from 2019 through 2022. The Actual amount of the distribution will be determined in March 2018, after year-end insured shares are reported. The NCUA will issue additional information regarding amount and accounting for any distribution in second quarter 2018.
As proposed by the NCUA, the Normal Operating Level will be raised to 1.39 percent effective September 29, 2017. The NCUA cited the remaining risk in the corporate assets, the decline in the equity ratio in the NCUSIF over the last few years, and the potential of an economic downturn.
During his remarks, Chairman McWatters said, “I want to emphasize that the agency will continue to analyze the Insurance Fund’s risk exposure, and each subsequent year the NCUA Board will evaluate what the normal operating level needs to be based on the relevant data and trends as they evolve over time.”
View the Board's Action Items and supporting documents here.
The Association’s Advocacy team will continue to monitor developments and advocate for a 1.30 percent NOL to ensure the maximum is returned to credit unions.