ALEXANDRIA, Va. — The expected $1 billion premium to be voted later this month for the National CU Share Insurance Fund is not in addition to an assessment to pay charges for the corporate credit union bailout, because the size of the corporate assessment remains unknown. A report in the Aug. 28 Credit Union Journal Daily Briefing could have been interpreted to indicate incorrectly that the $1 billion would be additional funds.
"New loss estimates have not effected plans for NCUA premium charges in 2009," said NCUA spokesperson John McKechnie. The 15-basis point estimate for an assessement was announced during NCUA's June 18 board meeting.
New legislation will allow NCUA to split the projected $6 billion cost of the corporate assessment over seven years as part of a Corporate CU Stabilization Fund, but an NCUA spokesperson said Friday the NCUA Board will evaluate the assessment for the corporate bailout on an annual basis, with hopes that it will turn out to be less than the $6 billion estimate.
The NCUA Board is scheduled to vote Sept. 24 on a premium of about $1 billion that will replenish NCUSIF reserves drawn down by growing losses at natural-person credit unions and the increase in NCUSIF coverage to $250,000 per account, from $100,000 per account.
Meanwhile, NAFCU called on new NCUA Chairman Deborah Matz Friday for more openness on the corporate bailout. "Our members and the credit union industry are still concerned," said NAFCU President Fred Becker in a letter to Matz, "that there is a lack of complete information regarding the health of the corporate system and the insurance fund as a whole. As credit unions will soon face assessments to bring the share insurance fund up to its normal operating (reserve) level, I urge you to be as transparent as possible in NCUA's future corporate and share insurance fund loss estimates, and provide credit unions with the information they need to plan for the future."
NAFCU and CUNA have been trying for months to obtain detailed information about the investments in U.S. Central FCU and WesCorp FCU, after the two corporate credit union giants were taken under conservatorship on March 20, but so far have received little of the requested information. Becker also expressed concern about the possibility, mentioned by NCUA officials, that a change in the ownership structure of the Central Liquidity Facility could mandate that natural-person credit unions buy stock in the emergency loan fund, currently owned by troubled U.S. Central. He said credit unions should not be required to make any one source their primary, regular or back-up source of liquidity.
