ARLINGTON, Va.—NAFCU is reiterating its opposition to the proposal by NCUA to raise the National Credit Union Share Insurance Fund's normal operating level and the merging of the stabilization fund into the NCUSIF.
"Although there could conceivably be short-term benefits to merging the Stabilization Fund with the SIF, NAFCU strongly believes such a move at this time would not be in the best interest of credit unions," wrote NAFCU President and CEO Dan Berger in a comment letter to NCUA.
"Therefore, NAFCU and our members: (1) stand in opposition to NCUA's proposal to merge the funds at this time; (2) strongly oppose any increase to the NOL; and (3) advocate that the agency is not required to charge a premium in 2017."
The NCUA proposal, issued in July, would raise the NCUSIF's normal operating level from 1.3% to 1.39%. The NAFCU board of directors along with two member-filled committees – the regulatory and NCUSIF committees – unanimously oppose this proposal, the trade association said.
Berger noted that if the NCUA moves forward with the current proposal, credit unions would only receive about 40% of what is "rightfully their money." He called it a "cash grab" and said it amounts to a "60% premium charged to the industry."
"In rushing such a complex proposal, NCUA is attempting to distract credit unions with the promise of dividends as the agency hoards nearly $800 million for itself by increasing the NOL to the highest level in the history of the SIF," Berger wrote. "That money should rightfully be returned to credit unions that made sacrifices as a result of the Stabilization Fund assessments."
In the letter, Berger explained that the NCUA has the legal authority to distribute refunds to the industry now, without merging the two funds. He also highlights how the proposal violates the statute and amounts to an "impermissible" premium assessment.
Berger also stated that the NCUSIF's normal operating level is set appropriately and that regardless of whether the funds are merged, the NCUA does not need to charge a premium. NAFCU's models show that the equity ratio will not fall below 1.20% until after 2019, Berger stated.