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 important, it would allow credit unions to account for the cost of the bailout over a seven-year period, rather than all this year, as generally accepted accounting principles require, according to NCUA.
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.
Under the proposal, at least ninety days before each repayment the NCUA Board will assess a special premium on all insured credit unions as necessary to fund that particular repayment. The premium calculation mirrors that of a NCUSIF premium calculation, and insured credit unions that fail to make timely payment of a Stabilization Fund assessment will be subject to the same special procedures and penalties as credit unions that fail to make a timely Insurance Fund premium payment.
