Ahead of NCUA meeting, NAFCU reiterates opposition to SIF premium
The NCUA Board meets today and is set to receive a briefing on the National Credit Union Share Insurance Fund (NCUSIF). Following the release of audit reports on the NCUA's four funds – including the NCUSIF, which showed its equity ratio stood at 1.26 percent at the end of 2020 – NAFCU's Curt Long argued that a premium is not necessary as the SIF's "audited financial statements show that the fund remains in a solid position."
NCUA Chairman Todd Harper has previously indicated that a premium may need to be assessed in 2021 to address credit unions' strong share growth resulting from the pandemic. While the current equity ratio is below the 1.3 percent threshold that would allow the NCUA to do so, Long, NAFCU's chief economist and vice president of research, detailed how the method for calculating the equity ratio creates a "mismatch."
"This mismatch only persists for a brief time until the capitalization deposit adjustments are billed, but it does span the period of time where the audited equity ratio is calculated," Long wrote Wednesday. "…NAFCU anticipates that the equity ratio will increase above that statutory threshold once capitalization deposit adjustments are recognized next month. Hence, any authority that the agency has to charge a premium merely reflects the aforementioned timing mismatch. NAFCU believes the agency should refrain from charging a SIF premium at this time."
NAFCU supports a strong NCUSIF and has advocated to the NCUA that proactive management of the fund must be balanced with the understanding that credit union resources are scarce. Instead of charging a premium to address share growth amid the coronavirus pandemic, the association has called for the agency to grant additional investment authorities to federal credit unions to address the issue.
In addition to receiving the NCUSIF briefing today, the NCUA Board is set to issue a final rule on joint ownership share accounts, providing parity with changes made for banks by the FDIC in 2019. NAFCU has previously offered support for the proposal and sent members a Regulatory Alert to break down the proposed rule's highlights.
The board will also receive a briefing on the Treasury Department's Emergency Capital Investment Program (ECIP), which was created by the Consolidated Appropriations Act.
NAFCU will monitor today's NCUA Board meeting – set to begin at 10 a.m. Eastern and available via livestream on the agency's website – and provide credit unions with updates afterward.
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