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Feb. 16, 2018

Insured CUs to receive $736 million equity distributions in 2nd half of ‘18

A $735.7 million “distribution” will be paid to federally insured credit unions, likely during the second half of the year, the result of a dividend from the federal insurance fund that insures savings in the cooperative financial institutions, the NCUA Board decided Thursday. Federally insured, state-chartered credit unions will also benefit from the distribution, including those (under certain conditions) that terminated federal insurance and adopted private insurance in 2017 (see following items).

At its regular monthly meeting Thursday, the two-member board declared the dividend to those credit unions insured by the NCUSIF for the year ending Dec. 31, 2017. The dividend, expected during the third quarter of 2018, will leave the NCUSIF at an equity ratio of 1.39%, which is the fund’s “normal operating level.”

The board raised the NCUSIF normal operating level Sept. 28 from 1.3% to 1.39% as it approved the closure of the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) and distribution of its assets to the share insurance fund. At the time, the agency said a dividend this year could range from $600 million to $800 million.

The agency said the NCUSIF’s equity ratio was 1.46% as of Dec. 31, 2017. The $735.7 million dividend to be paid this year will reduce the fund's equity ratio to the approved normal operating level of 1.39% and leave the available assets ratio at 1.33%.

In a release, NCUA noted that prior to the board’s action last September, the TCCUSF was scheduled to expire in 2021. The agency stated an equity distribution became possible after it won legal recoveries of more than $5.1 billion on behalf of five failed corporate credit unions, which NCUA said resulted in “materially decreasing the costs to the Stabilization Fund resulting from those failures.”

NCUA Board declaration of a Share Insurance Fund Equity Distribution for Year Ending 2017 

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A framework for future equity distributions from the federal share insurance fund – which includes a recommendation made by NASCUS to allow credit unions converting to private insurance a share of the distribution -- was approved as a final rule by the agency board as part of its Thursday meeting.

Under the new rule (which takes effect 30 days after publication in the Federal Register), NCUA will “effect” a pro rata distribution to credit unions that filed quarterly call reports as federally insured credit unions for at least one reporting period in calendar year 2017. However, according to NCUA, the rule also would prohibit a federally insured credit union that terminates share insurance coverage from receiving a distribution for the calendar year in which that termination occurred.

According to the agency, in addition to those credit unions filing at least one quarterly call report last year, institutions eligible for receiving a pro rata distribution also include:

  • (As recommended by NASCUS) Credit unions that converted to private insurance, provided they filed at least one call report as a federally insured credit union for a reporting period in 2017;
  • Active federally insured credit union as of Dec. 31, 2017;
  • Newly chartered federally insured credit unions that filed at least one call report for a reporting period in 2017;
  • Financial institutions that converted to federal share insurance during 2017, provided they filed at least one call report as a federally insured credit union for a reporting period in 2017; and
  • Liquidation estates, provided the liquidated credit unions filed at least one call report as federally insured credit unions for a reporting period in 2017. 

“The final rule retains the Board’s current policy of issuing distributions to federally insured credit unions and some other non-credit union financial institutions that leave the National Credit Union Share Insurance Fund through conversion, merger, or liquidation, provided they have filed a quarterly Call Report as a federally insured credit union for at least one reporting period in calendar year 2017,” the agency said in a statement released after the meeting.

Requirements for Insurance; National Credit Union Share Insurance Fund Equity Distributions

FAQs: NCUA’S Equity Distribution Rule


In its comment letter last summer, NASCUS urged the agency to maintain its “long-standing” policy of recognizing the contributions by a credit union to the insurance fund’s equity surplus in the year an equity dividend is declared, even if the credit union terminates federal insurance (presumably for private insurance) sometime that year.

And that’s exactly what NCUA did. NASCUS argued in its comment letter that the “longstanding commitment” by the agency to return to the converting credit unions their pro-rata share of a distribution is “the right thing to do.”

NASCUS President and CEO Lucy Ito also pointed out the importance of NCUA’s policies, outlined in the rule, promote similar treatments for credit unions converting from private share insurance to federal, and vice versa. “This ensures that credit unions seeking to make a change in their insured status, in the best interests of their members, are treated fairly in this process – and respects the dual-chartering system in doing so,” she said.

NASCUS comment letter: Requirements for Insurance: National Credit Union Share Insurance Fund Equity Distributions


Issuing its fourth “request for information” in as many weeks for “evidence” of how it is doing its job, the CFPB this week signaled that up to eight more RFIs will be issued in coming weeks. The RFI issued this week focuses on supervision processes at the agency. According to the agency’s filings with the Federal Register, it is seeking comments on the overall efficiency and effectiveness of its supervision program, as well as on any recommended changes.

The focus of the RFI, based on the agency’s filings, is “meaningful” reduction of regulatory burden placed on the organizations CFPB supervises, while also continuing to meet the bureau’s statutory requirements. “The Bureau’s ability to supervise entities is an essential part of the Bureau’s statutory mission of enforcing Federal consumer financial laws,” the agency stated in the overview of the RFI. “The Bureau engages in supervisory activities in accordance with applicable law and in furtherance of its statutory mandate. The Bureau understands, however, that the Bureau’s supervisory activities can impose burdens on entities,” the overview states.

Unlike the previous three RFIs, this latest will be issued for a 90-day comment period (the other three were issued for 60 days). CFPB estimated the comment period will begin Feb. 20.

The notice about the latest RFI was accompanied with a listing of eight other RFIs that the bureau anticipates issuing over the next months. Those topics for those are:

  • External Engagement
  • Complaint Reporting
  • Rulemaking Processes
  • Bureau Rules Not Under §1022(d) Assessment
  • Inherited Rules
  • Guidance and Implementation Support
  • Consumer Education
  • Consumer Inquiries

Press release: CFPB RFI on supervision processes


A pledge to commit to fulfill its statutory responsibilities, but to “go no further,” was made by the consumer bureau in its five-year strategic plan released this week – following a 2019 budget proposal by the White House recommending a change to the funding scheme for the agency.

For the strategic plan issued early in the week, Acting Director Mick Mulvaney said one way to summarize the changes at the bureau under his watch is: “we have committed to fulfill the Bureau’s statutory responsibilities, but go no further.” Mulvaney, in a release, added that by “hewing to the statute, this Strategic Plan provides the Bureau a ready roadmap, a touchstone with a fixed meaning that should serve as a bulwark against the misuse of our unparalleled powers.”

Earlier that day (Monday), the Trump Administration released its proposed 2019 federal budget, which calls for the agency to be funded through the congressional appropriations process, giving Congress a say in how much money the agency receives annually. Now, the bureau is funded through proceeds of the Federal Reserve. Additionally, the Trump 2019 budget would cap the bureau’s spending plan at its 2015 levels of $485 million. For 2018, CFPB is expected to spend $630 million.

The administration’s plan – spread out over two years – would also restrict the consumer agency’s enforcement authority.

CFPB Strategic Plan FY 2018 - FY 2022


Legislation on title fee calculations in mortgage lending, and clarifying that bank and credit union loan rates remain valid whether sold or reassigned to a third party, were both adopted by the House this week in two separate bills

Under H.R. 3978, the “TRID Improvement Act of 2017” the Real Estate Settlement Procedures Act of 1974 (RESPA), and the “Know Before You Owe” requirements under Truth in Lending-RESPA (TRID) would be amended to require the Consumer Financial Protection Bureau (CFPB) to allow for the calculation of the discounted rate title insurance companies may provide to consumers when they purchase a lender’s and owner’s title insurance policy simultaneously. The bill was passed by the House on a vote of 271-145.

Under H.R. 3299, the “Protecting Consumers Access to Credit Act of 2017,” the Federal Deposit Insurance and Federal Credit Union Acts would be amended to clarify that bank and credit union loans that are valid as to their maximum rate of interest in accordance with federal law when made remain valid with respect to that rate regardless of whether a bank has subsequently sold or assigned the loan to a third party. H.R. 3299 was adopted on a vote of 245-171.

Both measures now head to the Senate for consideration


Legislation designed to address public accessibility concerns under the Americans with Disabilities Act (ADA) – including with credit union websites -- passed the House this week on a 225-192 vote. The ADA Education and Reform Act (H.R. 620) would set conditions for filing civil actions over the failure to remove an architectural barrier to an existing public place by giving businesses time to come into compliance before a lawsuit can proceed, among other things. In a colloquy, Reps. Ted Poe (R-Texas, the bill’s author) and Rob Goodall (R-Ga.) agreed that in districts where the courts have determined that ADA applies to websites (such as in Georgia), H.R. 620 would also apply. They also discussed the 61 members of the House who urged the Department of Justice to finalize rules providing regulatory certainty. The colloquy (a legislative debate tool) was designed to outline congressional intent and help credit unions and other financial institutions deal with demand letters focusing on website accessibility and give the institutions time to come into compliance. The bill now heads to the Senate.


Two representatives of NASCUS-member organizations were on the Hill this week discussing key issues confronting the state system. NASCUS Secretary/Treasurer Bryan Schneider, secretary of the Illinois Department of Financial and Professional Regulation (IDFPR), testified before the House financial institutions subcommittee Thursday on “de-risking,” or the action of banks dropping accounts from “money services business” (MSBs) and other funds-transfer or remittances groups. Schneider told the subcommittee that wholesale rejections of the money transfer organizations “run counter to our expectation as bank regulators that banks can and should assess the risks of customers on a case-by-case basis.”

On Wednesday, Kim Sponem, president and CEO of NASCUS-member Summit Credit Union (in Madison, Wis.,) testified before the same subcommittee, but on the subject of data security in the wake of data breaches, such as the Equifax hacking last summer. Sponem told the panel that her credit union endorsed a national data standard, and strong breach notification requirements when they do occur. Additionally, she said “my credit union and other credit unions need data breach legislation that makes the breached entity responsible to others in the payments ecosystem for losses and other damages that are the result of a data breach.”

Schneider testified on behalf of the Conference of State Bank Supervisors (CSBS); Sponem testified on behalf of the Credit Union National Association (CUNA).

BRIEFLY: Committee discusses cybersecurity, net neutrality, and more; Powell pledges to preserve ‘gains in regulation’

The NASCUS Legislative and Regulatory Committee met this week to discuss a long list of key issues facing the state credit union system, including: cybersecurity; possibilities of technology; net neutrality; revised payment service directive (PSD2); Call report reform; and more. This week’s discussion aids in NASCUS’ preparation for participation in the annual CUNA Governmental Affairs Conference (GAC) in Washington, D.C., Feb. 25 - March 1 … Saying that the Federal Reserve will remain alert to any developing risks to financial stability, new Board Chairman Jerome H. “Jay” Powell said Tuesday the central bank would preserve regulatory changes made in the wake of the 2007-08 financial crisis. Powell, in remarks following a formal swearing in, said the Fed would “preserve the essential gains in financial regulation while seeking to ensure that our policies are as efficient as possible.”

Information Contact:
Patrick Keefe,