ARLINGTON, Va.—NAFCU has released an updated analysis of the National Credit Union Share Insurance Fund (NCUSIF).
The trade group said it believes the fund entered the COVID-19 pandemic in a strong position and expects the equity ratio will remain under “moderate stress” in 2021 due to strong share growth and low interest rates.
The updated analysis reviews the NCUSIF performance in 2020, the prospects for a premium charge in 2021, and some long-term issues to watch.
NAFCU Chief Economist and Vice President of Research Curt Long noted that NCUA has forecast the equity ratio would end 2020 just above 1.3%.
As long as that is the case, the NCUA board is not permitted to assess a premium, Long reminded.
As CUToday.info has reported, the association has been advising the agency against a premium assessment, noting strains on the NCUSIF’s normal operating level (NOL) are the result of share growth, not financial losses, and has advocated instead for additional investment authorities.
Concern Over ‘Punitive’ Decision
NAFCU said it continues to urge the board to return the NOL to its historic level of 1.3%. The agency is expected to convene a working group to assess the methodology for setting the NOL and solicit comment during that process.
"While a distribution is unlikely under any scenario in 2021, adopting [a punitive NOL methodology] makes it much less likely that a distribution is initiated in the future, and if it is, the amount would be much lower than under the current method," Long said.