FHFA issues final rule covering privately insured credit unions

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The Federal Housing Finance Agency – the federal regulator for all 11 Federal Home Loan Banks nationwide – on Friday issued its final rule governing the process all FHL Banks are to follow when considering a membership application from a privately insured credit union.

Federally insured FHLB member credit unions that convert to private share insurance need not reapply following the conversion. Per the final rule, their FHLB membership continues uninterrupted.

Dennis Adams, president and CEO of American Share, a Dublin, Ohio-based provider of private insurance, said he was “pleased” with the rule, adding the company has spent more than 15 years lobbying Congress for the rights of its member credit unions to have equal access to the FHLB system.

“The final rule is to become effective July 5, but contrary to other public reports, privately insured credit unions have been seeking and securing membership with their respective FHL Banks for more than 12 months now,” Adams said in a statement. “Since the FHFA issued its Guidance Letter on April 12, 2016, approximately 20 privately insured credit unions have joined their respective FHL Banks, and this final rule solidifies all that we have been working on for the benefit of our members since the December 2015 enactment of The FAST Act (HR 22).”

“I am equally pleased to see the FHFA implemented some of the changes we had asked for through our comment letter of Nov. 28, 2016, and through other interactions with the FHFA and various FHL Banks dating back to January 2016,” Adams added.

Privately insured credit unions have been able to apply for FHLB membership since the FHFA issued new guidance on the topic last April, and just two months later, the first PICUs joined their local FHLBs. Adams has previously stated he believes one reason some credit unions have shied away from the private insurance option has been the question of access to the FHLB system and has suggested the advent of equal access for PICUs may well spark a surge of interest in converting away from the National Share Insurance Fund.

“I would be remiss if I didn’t thank all of American Share’s legislative supporters throughout our long fight to move this legislation, including U.S. House sponsors Steve Stivers (R-Ohio), Joyce Beatty (D-Ohio) and Pat Tiberi (R-Ohio), and U.S. Senate sponsors Rob Portman (R-Ohio), Joe Donnelly (D-Ind.) and Sherrod Brown (D-Ohio),” said Adams.

American Share is a member-owned share guaranty corporation, licensed by the Ohio Department of Insurance and dual-regulated by the Ohio Departments of Insurance and Commerce. The corporation provides up to $250,000 of share/deposit insurance on each and every account of an individual member in an insured member credit union. For information visit: www.americanshare.com

Jeff Burt