 |
|
|
| Louisiana Credit Union League Home » NCUA new plan |
March 26, 2009
Dear
Thursday, March 26th the NCUA Board approved a proposal that would enable credit unions to spread out the $5.9 billion in insurance costs NCUA estimates federally insured credit unions will have to incur in connection with the NCUSIF assistance to the corporate credit unions. While CUNA is supporting the objective of the proposal they are working with NCUA to address specific questions, such as whether the $6 billion borrowing authority for the proposed Stabilization Fund is sufficient, and to ensure the proposal will maximize NCUA's ability to minimize the impact of the costs and properly spread them out over time.
Basically, under the proposal NCUA would be authorized to:
* Set up a Corporate Credit Union Stabilization Fund that would be able to borrow up to $6 billion from the U.S. Treasury;
* Through such borrowings, the agency would be able to spread out the insurance costs to federally insured credit unions up to 7 years; and
* Be used in only connection with a conservatorship, liquidation or threat of such action involving a corporate credit union.
Also, under the proposal:
* Dividends from the NCUSIF to credit unions would not be able to be paid until the borrowings by the Stabilization Fund from the Treasury were repaid;
* Amounts over the normal operating level of the NCUSIF that would be paid to credit unions as a dividend will be paid to Treasury to help repay the borrowings;
* NCUA must repay all loans within 7 years but the final date for repayment may be extended with the Treasury's concurrence; and
* The Stabilization Fund will be ended after 7 years.
CUNA will meet with NCUA Friday, March 27th to discuss the details of the proposal. LCUL will report more information to you following the meeting.
The proposed Corporate Credit Union Stabilization Fund legislation is available online at http://www.ncua.gov/CorporateStabilizationProgram.html.
