NASCUS Requests Clarification of NCUA's Corporate Assessment Authorities
August 11, 2011 - In a letter to National Credit Union Administration (NCUA) Chairman Debbie Matz, NASCUS inquired about the agency's corporate stabilization fund assessment authorities if credit unions depart from the National Credit Union Share Insurance Fund (NCUSIF).
The Temporary Corporate Credit Union Stabilization Fund (Stabilization Fund) was created in 2009 to give the NCUA authority to borrow from the U.S. Treasury to resolve corporate credit union failures. The legislation also allowed credit unions to pay back the borrowings through NCUA assessments over a 10 year period, estimated between $7 and 9 billion.
Given that departures from NCUA share insurance could impact the costs of the corporate stabilization on remaining credit unions and subsequently, the insurance fund, NASCUS is emphasizing the need for clarity in the agency's planning and asked for a greater understanding of NCUA's view on its authority to assess premiums for repaying the Stabilization Fund.
When the Stabilization Fund was created, NCUA anticipated the ability of federally insured credit unions to terminate their federal insurance and thereby avoid their financial obligations for the stabilization of the corporate system. NCUA asserted in 2009 that in the event of “a significant number” of conversions that would “materially increase the burden” on the remaining federally insured credit unions, NCUA could “accelerate the repayment” of remaining obligations. However, since then, there has been little discussion of the issue.
"NASCUS understands that at this point, NCUA does not have the authority to charge an individual credit union leaving the Fund for its corporate stabilization obligations," said NASCUS President and CEO Mary Martha Fortney. "However, NASCUS believes it is prudent to raise awareness and enhance understanding of the issue and inquire what contingency plans the agency has developed in the case of multiple departures from the NCUSIF."
NASCUS will follow up with additional information as it becomes available at www.nascus.org.