WASHINGTON—NAFCU is opposing NCUA's proposal to increase the normal operating level (NOL) of the National Credit Union Share Insurance Fund (NCUSIF) from 1.3% to 1.39%.
NAFCU, saying its position is based on a unanimous decision by its board of directors and two member-filled committees, is urging NCUA to reconsider this increase, citing a negative impact on the industry. In addition, NAFCU is asking NCUA for more due-diligence before acting to close the Temporary Corporate Credit Union Stabilization Fund (TCCUSF).
"We strongly urge the agency to avoid increasing the normal operating level for the share insurance fund," NAFCU President and CEO Dan Berger said on behalf of NAFCU's board and regulatory and NCUSIF committees. "The equity ratio is separate and distinct from corporate stabilization rebates, and NAFCU's goal is to get as much money as possible back to the industry, and to see it distributed as fairly as possible. We also disagree with the NCUA's analysis of risk to the share insurance fund."
While this increase in the equity ratio produced by the merger of the share insurance and stabilization funds would assure that the NCUA would not charge an NCUSIF premium this year, it would eat into the dividends credit unions should otherwise receive and would result in an unjustifiable retention of credit unions' funds.”
The dramatic increase in the normal operating level would come from the NCUA's proposed merging of the Temporary Corporate Credit Union Stabilization Fund into the NCUSIF, the trade association stated, adding that it is also urging the NCUA to exercise more due diligence before closing the TCCUSF.
"In addition, we respectfully ask the NCUA for a delay regarding the proposed fund merger, as the proposal is being unnecessarily rushed," Berger said. "Credit unions were required to deliver funds to the stabilization fund after five corporate credit unions failed – even those having no capital investments in the corporate credit unions – and they all deserve to be made whole."
NAFCU also has concerns with the legality of retaining credit unions' stabilization monies in the NCUSIF and the manner in which they will be refunded back to the industry, the trade association said.
"NAFCU members and staff have exhaustively reviewed and analyzed NCUA's proposal. NAFCU strongly supports credit unions receiving full rebates from corporate stabilization assessments as soon as possible, but there are too many questions as to the true impact of the NCUA's plan to support it at this time," Berger said.
NAFCU is encouraging credit unions to submit comments to the NCUA on this proposal.
Comments on this proposal are due to the NCUA by Sept. 5; NAFCU is also seeking members' input to the association's official comment letter by Aug. 22.