Congress Approves Bill Directing Study of NCUA Corporate Fallout

UPDATED Dec. 22, 2010 — In the last day of legislative business for 2010, Congress approved a bill, S. 4036, directing the Government Accountability Office to conduct a study of the National Credit Union Administration's (NCUA) supervision of corporate credit unions and implementation of prompt corrective action (PCA). The bill also amends the Federal Credit Union Act to allow Section 208 assistance to be counted towards net worth.

The study must include the reasons for the failure of any corporate credit union since 2008 as well as an evaluation of the adequacy of the NCUA's response to the failures. Further, the report will evaluate the effectiveness of PCA implementation and examine whether the NCUA has followed recommendations from Material Loss Review Reports of the NCUA Inspector General.

Following completion of the study, it will be transmitted to the House Financial Services Committee, the Senate Banking Committee and the Financial Stability Oversight Council. The GAO has one year to complete the study.

The bill also includes technical corrections allowing the NCUA to pay down the Temporary Corporate Credit Union Stabilization Fund without borrowing from the U.S. Treasury and to calculate the equity ratio solely on the unconsolidated statements of the National Credit Union Share Insurance Fund (NCUSIF).

The bill now awaits the President's signature. To view the text of the bill, follow this link.