ALEXANDRIA, Va.–The NCUA board has voted to maintain the normal operating level (NOL) of the NCUSIF at 1.38%, while also confirming no distributions from the insurance fund will be paid out in 2020.
The board received an update on the NCUSIF during its monthly meeting. The Federal Credit Union Act allows the NCUA board to set the normal operating level between 1.20% and 1.50%. The NCUSIF NOL has been set at 1.30% for many years before the board raised it to 1.38% in December of 2018 in conjunction plans for a three-quarters-of-a-billion-dollar payout to CUs earlier this year after the NCUSIF was combined with the Temporary Corporate CU Stabilization Fund.
Agency staff said the higher NOL is aimed at ensuring the insurance fund can withstand a moderate recession without the equity ratio declining below 1.20% over a five year period.
Following staff presentations, NCUA Board Member J. Mark McWatters did express some concerns over whether the fund has adequate reserves.
“To me it’s always interesting to note the credit union community is now approaching $1.5 trillion in assets and we have an insurance fund with $16 billion, $17 billion in it. This is razor thin,” said McWatters. “There is not a lot of leeway here whether or not there is a normal operating level set at 1.38 or 1.20. It’s still razor thin, and that tells me what is really important is our supervision and examination.”