TCCUSF to close, NOL increasing to 1.39%
The NCUA Board Thursday voted to raise the normal operating level (NOL) of the share insurance fund to 1.39 percent – as proposed – and approved merging the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) with the National Credit Union Share Insurance Fund (NCUSIF).
These actions, taken during the board's open meeting, set the stage for the NCUA to retain almost $1 billion from the merger of the funds.
The TCCUSF will be closed in 2017 and will distribute its funds, property and other assets and liabilities to the NCUSIF on Oct. 1. The NOL of the NCUSIF will be set to 1.39 percent, effective today. As a result, NCUA anticipates a $600 million to $800 million distribution to credit unions in 2018 with additional distributions possible. This would amount to credit unions being refunded only about 15 percent of their original assessments made to the TCCUSF.
"NAFCU and the credit unions we represent appreciate the NCUA's work on this issue, but this approach and outcome are not ideal," said NAFCU President and CEO Dan Berger. "While we welcome credit unions getting some money back in 2018, raising the NOL by 9 basis points is unprecedented and unnecessary. Two-thirds of all who commented on the proposal – including our members – opposed such a dramatic increase and rightly so.
"NAFCU was the only trade association fighting to maintain the NOL at 1.3 percent," Berger continued. "From our board of directors and two member-filled committees to input from other credit unions, we were asked to advocate for what is in the best interest of our members and that meant challenging this proposal. NAFCU will continue to push for future rebates for credit unions."
The NCUA said Thursday that actual amounts being distributed will be determined in March 2018, after year-end insured shares are reported. At the end of the second quarter, the NCUA said it would issue additional information regarding amount and accounting for any distribution.
A quarterly report on the TCCUSF, delivered Thursday by NCUA Chief Financial Officer Rendell Jones, said the stabilization fund's net income for the second quarter was $413.2 million.
Board Chairman J. Mark McWatters shared the results of Thursday's meeting with House Financial Services Subcommittee Chairman Sean Duffy, R-Wis., in response to the lawmaker's earlier letter expressing concerns over the proposal.
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