ALEXANDRIA, Va.—The process and basis for NCUA setting the Normal Operating Level (NOL) of the National Credit Union Share Insurance Fund (NCUSIF) at 1.39% are “fair and reasonable,” according to the agency’s Office of Inspector General (OIG).
As CUToday.info reported, the OIG received a request from Callahan & Associates asking for a determination of the legality of the NCUA board’s approval of the transfer of funds from the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) to the NCUSIF, as well as an increase the NOL of the NCUSIF from 1.3% to 1.39%.
The board voted in favor of combining the funds and most recently announced a $736-million NCUSIF equity distribution to federally insured credit unions.
While the OIG determined that is was not within its purview to rule on the legality of the board's decision, it said it did evaluate the board’s rationale for the move by reviewing applicable legislation and the process for setting the NOL at 1.39%. The OIG said it also compared the NCUA's rationale for this move to the FDIC’s when it recommended increasing the Deposit Insurance Fund’s Designated Reserve Ratio in 2011.
NAFCU, which has been pressing NCUA to keep the NCUSIF’s NOL at 1.3% “so credit unions could realize the fullest distribution possible from the NCUSIF,” continues to maintain that position and wants “to return the NOL to that level as soon as possible.”
Based on NCUA's figures, the increase in the NOL to 1.39% will result in the additional retention of approximately $980 million in the NCUSIF. These funds would have been added to the distribution to credit unions if NCUA had not increased the NOL, NAFCU noted.