Federal regulator’s action on corporate CUs will affect credit unions through 2021
The National Credit Union Administration (NCUA), credit unions’
federal regulatory agency, took action Sept. 24 on several issues
affecting the corporate credit union system. Corporate credit unions are
“wholesale” credit unions that provide “back
office” financial and administrative services to
“retail” credit unions – those that provide services
to the consumers who are their members. The NCUA’s actions stand
Already, all federally insured credit unions nationwide – including all credit unions in Wisconsin – have paid a total of $1.3 billion for Corporate Stabilization through two assessments by the NCUA last year and this year. Credit unions have until 2021 to pay the remainder of the corporate losses through payment of their annual assessments. NCUA will advise credit unions at its November 2010 board meeting the dollar amount it projects as the corporate assessment for 2011. Currently, the annual average Stabilization assessment is estimated at 6.9 basis points to 7.7 basis points, or between 6 to 8 cents for every $100 of insured deposits.
Also in November, the agency will project an estimated premium credit unions must pay to keep the credit union system’s Share Insurance Fund operating at a safe level. This cost is apart from the corporate expense and is determined by losses experienced by retail credit unions nationwide. Credit unions will pay premiums annually, as necessary, to cover this cost. The premium amount for 2010 was 12.42 basis points, or just over 12 cents for every $100 of insured deposits. In future years, this cost will continue to be based on amount of actual losses incurred by retail credit unions. So the better credit unions do, the less they will have to pay in premiums.
NCUA Chair Debbie Matz has applauded credit unions in recent news coverage for handling these costs on their own, without any expense to taxpayers. CUNA President & CEO Bill Cheney has underscored that point as part of media interviews and a video that stresses credit unions have not received a “bailout.”
The League has posted materials in its Corporate Stabilization webpage to help credit unions understand, calculate and plan for future Corporate Stabilization assessments as well as Share Insurance premiums. The site also includes a summary of the NCUA’s actions as well as talking points to help credit unions explain them to board members, members and media.
League consultant Bill
Rockeman also continues to work with
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