Corporate fund position, rebate potential dominate board discussion
Dec. 15, 2016 -- Credit unions shouldn’t expect rebates on their assessments for the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) before 2021, a position reiterated during a staff briefing about the fund at Thursday’s NCUA Board meeting in Alexandria, Va.
However, during a protracted presentation about the stabilization fund, staff told the board that the agency is evaluating the potential of closing the fund early. As staff pointed out, there are benefits and disadvantages of doing so. Among the benefits: doing so would allow the agency to use the current positive “net position” of the fund (about $1.5 billion) to offset National Credit Union Share Insurance Fund premiums. Among the disadvantages: increased potential volatility for the insurance fund’s equity ratio. In any event, NCUA Director of Examination and Insurance Larry Fazio told the board that the agency “can’t rebate funds at this time.”
On the other hand, during the briefing, staff said any rebates of credit union assessments to the stabilization fund will be determined by asset performance, future recoveries via legal action, and economic variables. However, they also estimated the range of assessment rebates from $2.5 billion to $3.2 billion when the stabilization fund closes as scheduled in 2021. Additionally, staff noted, those rebates could only come after other obligations are paid out.
Also at the meeting, the board:
- Approved a revised member business loan rule for the state of Texas to provide parity with NCUA’s revised rule Part 723. NCUA said its Region IV office performed a safety and soundness review of the Texas rule and determined that the agency “did not expect the 2017 rule, as proposed, to cause future safety and soundness concerns. We believe approval of the Texas Member Business Loan Rule would not result in an unacceptable exposure to the NCUSIF.” During discussion NCUA Board Member Rick Metsger called the Texas Credit Union Department (led by Commissioner Harold Feeney) “a very strong department.”
- Approved a final rule for federal credit unions eliminating requirement that a credit union must plan for, and eventually achieve, full occupancy of acquired premises.
- Approved an interim final rule on the agency’s Freedom of Information Act responses, mostly dealing with document availability, charges for reviewing, and the right of requesters to seek assistance.