ALEXANDRIA, Va.-The expected consolidation and recapitalization of the corporate credit union system, hoped for by the end of 2009, is not expected to be enacted until the spring of 2010, at the earliest.
NCUA officials say they are still wading through more than 500 submissions under their advanced notice of proposed rulemaking on remaking the corporate system and don't expect to formulate the comments into a proposed rule until early this fall. The proposed rule will also be issued for public comment before it is furnished into a final structure and put to a vote by the NCUA Board in the spring of next year.
The new structure is expected to include a consolidation of the current 27 corporate credit unions, new standards for capital, investments and services.
NCUA, which issued the ANPR in January in the face of a $1.2-billion loss by U.S. Central, had originally hoped to complete the restructuring of the corporate system this year.
Separately, NCUA said last week it formally transferred the entire $6-billion corporate bailout program - including the emergency assistance for U.S. Central FCU and WesCorp FCU and responsibility for the Temporary Share Guarantee and Temporary Corporate CU Liquidity Guarantee programs - from the National CU Share Insurance Fund to the newly formed Corporate CU Stabilization Fund.
The maneuver will allow the NCUSIF to wipe out the $5.9-billion charge to credit unions for the corporate bailout and for credit unions to restore the 0.69% impairment of their 1% NCUSIF deposit. As a result, natural person credit unions will be able to reflect a fully restored 1% NCUSIF deposit on their June 30 Call Reports.
Instead, the $5.9-billion charges will now be assessed over the next seven years through the Corporate Stabilization Fund, with one-seventh of it, or 15 basis points, to be charged this year.
Separately, NCUA said it expects the NCUSIF to assess a 15 bp premium to pay for troubles among natural person credit unions and for the dilution of the NCUSIF reserves to the increase in deposit insurance coverage to $250,000 per account.
Under the transfer of the corporate bailout, the Corporate Stabilization Fund has paid the NCUSIF $1 billion to assume the emergency note issued to U.S. Central, thereby releasing the NCUSIF from any reserve requirements related to the capital note.
