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Matz: NCUSIF Could Go Slightly Below 1.2% Level

CHICAGO-The NCUA Board would consider allowing the National Credit Union Share Insurance Fund (NCUSIF) to operate with an equity ratio slightly below 1.2%, but will not consider allowing that ratio to drop anywhere near the 1.1% range or even lower as some have proposed, according to NCUA Chairman Debbie Matz.

NCUA had budgeted for the fund to operate closer to 1.3% in 2010, but ongoing losses-$132 million to date-have forced additional funds be placed into reserves, and the fund currently has an equity ratio of approximately 1.22%. The NCUSIF is required by law to operate with a 1% minimum equity ratio, but once it drops below 1.2% NCUA is required to provide Congress with a net worth restoration plan.

"NCUA is focused on careful management of the share insurance fund's equity ratio," Matz said. "While our equity ratio remains within its normal operating range between 1.2 and 1.3%, it has declined since beginning of the year. Some have called for it to operate a few basis points below the 1.2%, and this is one option for the NCUA board to consider to ease the assessments."

But going any lower is not feasible, said Matz. "Given the magnitude of losses, I believe it is not practical to manage the ratio to just a few basis points above the 1.0%." Matz noted there are currently 2,100 credit unions operating as either CAMEL 3, 4 or 5, representing 21% of all federally insured assets.

Previously, NAFCU CEO Fred Becker had reiterated his group's position that the board OK the fund operating below the 1.2% threshold.

 

Stay Granted In HeritageWest Suit

SALT LAKE CITY-A judge last week granted a 90-day stay to NCUA in a lawsuit filed in 2009 by 32 investors in the Castle Stone Homes real estate development project that was being financed by the now liquidated HeritageWest FCU in Tooele, Utah. U.S. District Judge Ted Stewart for the District of Utah (Central) ruled that "there is no time limit for the liquidating agent to request such a stay and that upon such a request a court shall grant it as to all parties." In their complaint, the investors argue that they had been promised low-risk investments secured by tangible property, and that construction loan funds were exhausted with the homes just 50% to 75% complete.

 

Beal: Telling Story Is Only The Start

CHICAGO-Echoing comments heard one week earlier at the 1 Credit Union Conference hosted by CUNA and WOCCU, credit unions attending NAFCU's Annual Convention here also expressed a desire to do more to tell their story at a time when consumer pessimism related to banks has never been higher. While there is always talk of change, especially in technology, NAFCU Chairman Brad Beal reminded that "first, consumers still want quality, affordable financial services from a trusted institution. I don't need to tell you that credit unions are seeing droves of new members, some three-million in the last two years. But having said that, we can do even better. One of our big challenges is how do we increase awareness of credit unions among consumers...Credit unions were created for times like these."

 

Iowa Police Arrest 18 In Check Scam

WATERLOO, Iowa-Police arrested 18 suspects in a check kiting scheme that allegedly bilked area credit unions and banks out of more than $100,000. Among the victim institutions were Veridian CU, Iowa Community CU, Wells Fargo and Regions Bank. Prosecutors said members of the group opened accounts at various institutions to get starter checks and debit cards. They then swapped checks and misused the "float" in bank transactions to make false deposits and artificially inflate the value of the accounts. Members allegedly used the debit cards and checks to get cash and make purchases.

 

CU Launches Global Remittance Svc.

BETHESDA, Md.-The National Institutes of Health FCU is rolling out a global remittance services through BNY Mellon's Remit Worldwide. The service will enable members to remit funds to beneficiaries in more than 17 countries on five continents in a safe and secure banking environment.. "Our members come from every continent as they engage in cutting edge biomedical research or in the health care industry here in the USA. The global diversity and high-end educational and occupational demographics of our membership make remittances a natural addition to our portfolio of service offerings," said Juli Anne Callis, NIHFCU's president.

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