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CUNA Outlines Major Concerns with NCUA White Paper
Friday, April 10, 2015 6:20 AM

This week, the National Credit Union Administration released a National Credit Union Share Insurance Fund (NCUSIF) Improvements white paper suggesting changes to the operation and structure of the NCUSIF. The paper recommends legislation that would make three changes:

  • Allow the agency to levy premiums sufficient to increase the equity ratio of the fund far beyond current limits. The white paper suggests NCUSIF needs an equity ratio of "at least 2 percent," compared to the current operating range of 1.2 percent to 1.3 percent;
  • Base assessments on the sum of all shares and deposits and liabilities, not just insured shares; and
  • Allow risk-based premiums.

CUNA notes the good news is that the agency has apparently not made seeking legislation to implement the recommendations of the white paper a priority, as the paper carries a September 2013 date, and has just now been released in response to a Freedom of Information Act Request.

Also, CUNA is not aware that agency officials have pressed or even raised the issue on Capitol Hill. However, the really bad news, CUNA says, is that the agency considers these changes even remotely necessary or desirable, particularly the first one, increasing the size of the insurance fund's equity ratio.

CUNA is analyzing the proposal in depth, but says a preliminary review reveals it to be "yet another example of the agency proposing a solution with absolutely no demonstrable problem to address." CUNA finds it particularly troubling that there are frequent references to the need to make changes similar to those recently put in place for the Federal Deposit Insurance Corp., which insures bank deposits. CUNA reminds that credit unions are not banks and do not operate like banks, and the historical performance of NCUSIF compared to FDIC clearly demonstrates this.

For more on CUNA's assessments, follow this link.