ALEXANDRIA, Va. - Federally insured credit unions are in for a big treat this Halloween: a $103 million rebate from the insurance fund.

The National Credit Union Administration Board on Oct. 19 unanimously voted to issue the refund, and checks will be mailed to federally insured institutions on Oct. 31.

"This is an historic occasion," said Dennis Winans, chief executive officer for the agency.

The NCUA milked the event for all it was worth. Balloons decorated the walls, and after the board voted, NCUA Chairman Norman E. D'Amours signed a symbolic giant check made out to "all federally insured credit unions."

The agency, which oversees the National Credit Union Share Insurance Fund, issued the rebate because the fund's equity ratio now exceeds the statutory 1.3% level and is expected to hit 1.34% by December. The refund will return the ratio to 1.3%.

Credit unions capitalize the fund with an amount equal to 1% of their deposits. The refund represents a 4.25% return on that contribution.

In his presentation to the board, Mr. Winans said a refund is likely next year because the fund is healthy and the number of problem credit unions is the lowest in years.

However, both NCUA Vice Chairman Shirlee Bowne and Director Robert Swan asked why to why a larger refund couldn't be issued this year and none next year.

Mr. Winans and NCUA director of examination and insurance David M. Marquis replied that the fund's equity level should remain as high as possible, given the potential for systemic risk, fraud, and other time bombs.

That didn't satisfy Mr. Swan.

The agency is "taking an approach that is as conservative as possible," he said, making it clear that he would prefer a more liberal style.

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