NCUA Issues Final Rule Regarding Net Worth from Senate Bill 4036
Sept. 26, 2011 - In January of this year, the President signed Senate Bill 4036 which included amendments to the Federal Credit Union Act to clarify the use of the term net worth in combination transactions and to allow Section 208 assistance to be counted towards net worth.
The final rule includes the following changes:
· Under the amended definition, the equity ratio will be calculated using the financial statements of the insurance fund alone, without any consolidation or combination with the financial statements of any other fund or entity.
· It authorizes the NCUA Board to include §208 assistance in the calculation of net worth for Prompt Corrective Action (PCA). It also clarifies that Section 208 assistance can be used in other situations in addition to mergers.
· It also makes a change to the definition of net worth to eliminate the double counting of net worth in a combination resulting in a bargain purchase gain transaction.
This final rule will become effective 30 days after publication in the Federal Register.
Also at the September NCUA Board meeting, the NCUA delegated authorities to the Office of Corporate Credit Unions (OCCU) in advance of the Oct. 20, 2011 effective date of new corporate credit union regulations. To read more on this issue, click here. The monthly insurance fund report can also be viewed here.