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Net Position of Stabilization Fund Improves by Nearly $3.4 Billion
Friday, March 21, 2014 6:45 AM

The net position of the Stabilization Fund has improved by nearly $3.4 billion according to the National Credit Union Administration. The agency’s chief financial officer reported on the Stabilization Fund’s operations at yesterday’s NCUA board meeting. Based on audited information, the net position of the Stabilization Fund has reportedly improved from a $3.5 billion deficit at Dec. 31, 2012, to a $142.2 million deficit at Dec. 31, 2013.

“Effectively managing the Stabilization Fund to minimize federally insured credit union assessments is a top NCUA priority,” NCUA Board Chairman Debbie Matz said. “Settlements with JPMorgan Chase and Bank of America, coupled with improvements in anticipated future cash flows from legacy assets of the NCUA Guaranteed Notes program, led to a sizable improvement in the Stabilization Fund’s net position in 2013. I’m hopeful we can forgo charging assessments not only in 2014, but in future years as well.”

The NCUA Board announced at the November 2013 meeting there is no planned Stabilization Fund assessment for 2014.

The Stabilization Fund had $2.9 billion in outstanding borrowings with the U.S. Treasury on Dec. 31, 2013, a decrease of $2.2 billion for the year.

When the Stabilization Fund has outstanding borrowings from the U.S. Treasury, the Federal Credit Union Act requires NCUA to make a distribution from the Share Insurance Fund if the Share Insurance Fund has an equity ratio above the normal operating level of 1.30 percent at year’s end. As a result, NCUA transferred $95.3 million to the Stabilization Fund, which will reduce future cash needs of the Stabilization Fund. Before the transfer, the Share Insurance Fund equity ratio was 1.31 percent.

The Stabilization Fund recently received an unmodified, or clean, audit opinion for the fifth year in a row from the independent auditor KPMG LLP.

At yesterday’s meeting, the NCUA board approved a proposed joint agency rule on minimum requirements for appraisal management companies, but Chairman Matz noted that NCUA will not be able to enforce it because of a statutory obstacle. Six federal financial regulatory agencies, including NCUA, are proposing the rule to implement the requirements of Section 1124 of Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 as added by Section 1473 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The intent is to better ensure the quality of appraisals and assure compliance with the Truth in Lending Act.

Once all six agencies have approved the proposed rule, available online here, it will be published in the Federal Register, and comments must be received within 60 days of publication.