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NCUA Approves TCCUSF Closure, Refunds to Start in 2018
Friday, September 29, 2017 6:25 AM

The NCUA board on Thursday approved the merger of the agency’s corporate stabilization fund with its Share Insurance Fund. Under federal law, the stabilization fund has been used to provide the agency with the ability to mitigate costs from stabilizing the corporate credit union system.

The merger is likely to result in an initial Share Insurance Fund distribution to federally insured credit unions of between $600 and $800 million. The stabilization fund had been scheduled to close in 2021.

Cornerstone Credit Union League SVP Regulatory Compliance Suzanne Yashewski said, “I want to thank all those credit unions who took time to submit a comment letter. Comment letters played no small part in making this change happen, as a reported 90 percent of credit unions were in favor of the position.”

CUNA President/CEO Jim Nussle called NCUA’s decision to close the Temporary Corporate Credit Union Stabilization Fund and begin issuing refunds in 2018 a victory for credit unions. 

“The NCUA board voted to ensure that credit unions will receive the funds they deserve 2018. We thank Chairman McWatters and board member Metsger,” said Nussle. “This is a win for credit unions because they are the best stewards of credit union resources.” 

At the same meeting, Board Chairman J. Mark McWatters and board member Rick Metsger both voted to close the fund and set the normal operating level (NOL) from 1.30 percent to 1.39 percent, a move that was dictated, in part, by the merger of the funds.

CUNA had raised concerns about NCUA’s proposal and advocated that the NOL be lowered. 

"CUNA wrote to the agency saying the proposed NOL was too high, but the agency indicated it was retaining this level to provide additional cushion to the share insurance level if there were to be an economic downturn,” said Nussle. “Going forward, we will continue to engage with the agency to ensure any raise is merely temporary.” 

Cornerstone SVP Chief Advocacy Officer Jim Phelps echoed Nussle's sentiments. "We supported merging the fund this year to enable rebates in 2018, but we did not support raising the equity ratio much above the current level. It's been our view that if the NOL were raised, it should only be a temporary increase."

Credit union trade groups have split on closing the stabilization fund. CUNA has endorsed the proposal, while NAFCU has said that additional research is needed before the merger takes place.