WASHINGTON – The leading credit union entities are uniting behind a plan that would allow NCUA to stretch out the assessment to pay the costs of the corporate bailout–now $5.9 billion and growing–over as many as eight years.
NCUA, which last week endorsed a payback as long as five years, said yesterday it supports a proposal by the leading industry lobby groups CUNA and NAFCU to stretch out the repayment for as long as eight years.
The NCUA change comes after last Friday’s takeover of U.S. Central FCU and WesCorp FCU added at least $1.2 billion to the $4.7 billion bill for the corporate bailout, which was already projected to push three-fourths of all credit unions into the red if they are forced to repay the funds this year.
To stretch out the payback the credit union lobby must convince Congress to amend the Federal CU Act, which currently requires NCUA to replenish the National CU Share Insurance Fund in the same year the fund’s reserves fall below 1.2 (dollars reserved per $100 of insured deposits).
"The real issue for credit unions is we’ve got to get the time to pay this back," said Frank Pollack, president of Pentagon FCU, which has hired its own lobbyist to press its case on Capitol Hill.
"We want to see NCUA, NAFCU and CUNA come forward and say ‘we’ve got to be able to pay this back over time and spread this thing out, just like the banks are able to do,’" the CEO of the $14 billion credit union told The Credit Union Journal
Both CUNA and NAFCU have been lobbying the NCUA Board for its support of the longer payback. "Given the substantial impact of the (U.S. Central and WesCorp) conservatorships and what NCUA indicated could be the total impact financially, eight is an absolute minimum without adversely impacting credit union service to their members," said Fred Becker, president of NAFCU.
