August 21, 2017

NAFCU opposes increase in NCUSIF normal op level, urges further study

NAFCU, based on a unanimous vote from its Board of Directors and two member-filled committees, is urging the NCUA to reconsider its proposal to raise the National Credit Union Share Insurance Fund's normal operating level from 1.3 percent to 1.39 percent, citing a negative impact on the industry.

"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."

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. While this increase in the equity ratio 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.

NAFCU 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 added. "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 assessment refunds in the NCUSIF and the manner in which they will be refunded back to the industry.

"NAFCU members and staff have exhaustively reviewed and analyzed the NCUA's proposal," Berger said. "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."

NAFCU is encouraging credit unions to submit comments to the NCUA on this proposal. The association has made available to its members a Regulatory Alert, comment letter template with talking pointsand an economic analysis and forecastpredicting how the proposal may affect NCUSIF dividends to insured credit unions.

Comments on this proposal are due to the NCUA by Sept. 5; NAFCU members' input to the association's official comment letter is due today.