ALEXANDRIA, Va. – The NCUA Board this afternoon proposed a new vehicle that would segregate the costs and expenses related to the corporate bailout from the National CU Share Insurance Fund and help the federal regulator stretch out the $5.9 billion cost to as long as seven years.
The so-called Corporate Stabilization Fund, which will require approval by Congress, would be authorized to borrow up to $6 billion from U.S. Treasury on a revolving basis.
The fund would last for seven years after, which NCUA would have to shut it down.
Most importantly, from an accounting standpoint, the fund would allow credit unions to stretch out the payment on their books to as long as seven years, rather than requiring them to take the full charge for the corporate bailout all at once, as generally accepted accounting principles require.
The Stabilization Fund would be required to repay the Treasury, with interest, all amounts borrowed, but the Fund has discretion as to the timing of each repayment and the amount of principal included with each repayment. The Fund would make assessments on federally-insured credit unions as it determined necessary to make each repayment.
