ALEXANDRIA, Va. – NCUA is putting together a proposal that will require credit unions to pay another $1 billion into the National CU Share Insurance Fund in the face of rising credit union losses and expanded coverage on member deposits.
The charge will be voted at the Sept. 24 NCUA Board meeting, according to John McKechnie, NCUA chief spokesman. Credit unions would be required to pay the extra charge in the fourth quarter.
The additional charge, to be raised in a premium later this year, will raise the reserve ratio for the NCUSIF to the agency’s desired level of 1.3% (dollars reserved per $100 of deposits). Without the premium the reserve level would decline to a projected 1.22 by year-end, according to McKechnie.
The lowering of the reserves is due to two main factors. The first is the growing losses among natural person credit unions and their need for assistance from NCUA. The second is the increase in deposit insurance coverage to $250,000 per account from $100,000, which diluted the reserves.
As of August 24, there were 11 credit union failures, including four liquidations and seven assisted mergers. That does not include U.S. Central FCU and WesCorp FCU, the two corporate credit union giants taken over by NCUA on March 20.
