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NAFCU President and CEO Dan Berger welcomed the NCUA Board's decision Thursday to reach out to the credit union industry for input on the closure of the Temporary Corporate Credit Union Stabilization Fund but noted concerns about the proposal to set a 1.39 percent "normal operating level" for the share insurance fund.

The proposal, NCUA says, contemplates closing the TCCUSF this year, with the fund merged into the National Credit Union Share Insurance Fund by Sept. 30.

NAFCU is looking at all sides of this issue, but Berger noted concerns particularly about the proposed increase in the NCUSIF equity ratio target.

"There are many factors involved in a potential merger of the stabilization fund into the National Credit Union Share Insurance Fund, and public discourse is crucial to developing a solution that is in the best interests of all credit unions," Berger said in response to today's action. "However, the proposed substantial increase in the normal operating level is unacceptable, and NAFCU will strongly urge the agency to avoid such a dramatic move."

Berger continued, "NAFCU will be giving the NCUA our members' feedback on all aspects of the proposal. For our part, NAFCU recommends the agency's decision take into account two facts: 1) under the Federal Credit Union Act, the NCUA is not required to assess a premium in 2017, and 2) we believe the NCUA has the legal authority to return assets to credit unions directly. The money credit unions pay to the NCUA comes from its members, and it should be returned to the fullest extent possible."

The proposal issued Thursday has a comment deadline of Sept. 5. The NCUA is urging credit unions to provide their input earlier rather than later so there is time to merge the two funds by Sept. 30, in turn facilitating a possible dividend to credit unions in mid-2018.

The NCUSIF, according to a report released Thursday, had a 1.22 percent equity ratio in June and is expected to return to 1.26 percent after credit unions' adjustment to their 1 percent NCUSIF deposit is counted.

In other action Thursday, the board released a proposal for comment on NCUSIF equity distributions and another on emergency mergers. In a mid-session budget review update, staff also reported on a 2 percent reduction in the 2017 budget to $292.1 million. (Access Thursday's proposals, reports.)