ALEXANDRIA, Va. — The NCUA Board last week began a hurried bid to stop credit unions from converting to private deposit insurance in order to escape assessments for the corporate credit union bailout.
The Board issued for a quick 30-day comment period a proposed rule that would make all federally insured credit unions responsible for replenishing their 1% National CU Share Insurance Fund deposit the moment NCUA announced publicly the need to do so.
The rule will also make all credit unions liable for any premiums assessed by the NCUSIF if they are insured by the NCUSIF in the same calendar year.
NCUA is expected to assess an NCUSIF premium of about $1 billion later this year.
The rule would not apply to the newly created Corporate CU Stabilization Fund which is managing the $6-billion corporate bailout.
The proposed rules comes as several credit unions are exploring whether they could escape this year's NCUSIF charges--which are assessed all federally insured credit unions--if they convert to private insurance.
"For the first time this crisis has brought to our attention that our regulations did not contemplate this situation," said NCUA Board member Gigi Hyland.
The NCUA Board also approved the renewal of the credit union union usury ceiling, the maiximum allowable interest rate charged by federally chartered credit unions, at 18%.
The Board also approved several minor changes to its Temporary Corproate CU Liquidity Guarantee Program, which guarantees senior unsecured debt issued by corporates to clarify the claims process and implement NCUA's order obligating the new Corporate CU Stabilization Fund for all payments required under the program.
