WASHINGTON - The country's 12,000 federally insured credit unions will be receiving a rebate from the National Credit Union Share Insurance Fund this year.
The refund should run between $85 million and $100 million, according to the National Credit Union Administration, which oversees the insurance fund.
Credit unions are due the windfall because this month the equity level of the $3.4 billion insurance fund hit 1.3% and is expected to end the year at 1.33%. The agency is required to return money to credit unions once the ratio breaks 1.3%.
"The board could refund the amount over 1.3%; it could refund even more if it wanted," said Bob Loftus, the agency's director of public and congressional affairs.
For example, instead of returning enough money to lower the equity ratio to 1.3% and later being forced to do another refund, the agency could deplete the fund to 1.28%.
Mr. Loftus said neither the timing nor the form of the payment has been determined. However, the plan with the most support appears to be a direct transfer of funds to the credit unions.
Another option is using the surplus to offset any increase in the 1% of insured deposits credit unions must deposit with the fund. A less likely plan is to subtract the money from credit unions' operating fees.
"All of those are options, but it's up to the NCUA board," Mr. Loftus said.
This is the second refund paid by the fund since 1985, when it was recapitalized with 1% of credit unions' insured deposits. The first was in 1986 when it paid out $30 million.
NCUA Chairman Norman E. D'Amours announced the refund May 16. The day before, however, a director of the agency, Robert Swan, reportedly told a Wisconsin audience that it was planning to raise the equity level of the fund rather than return the money.
"No person with authority or responsibility at NCUA has suggested raising the equity level of the fund," Mr. D'Amours said in a news release. "Moreover, we are unaware of any effort on Capitol Hill to increase the equity level."
In an interview, Mr. Swan said his remarks in Wisconsin were misinterpreted. While he and the board has always favored a refund, Mr. Swan said some of the agency's staff have been advocating holding on to the money.
