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Velocity CU members to vote on private share insurance
AUSTIN, Texas (12/7/09)--Roughly 75,000 Velocity CU members are being asked to vote by Dec. 29 on whether to switch from the National Credit Share Insurance Fund (NCUSIF) deposit insurance administered by the National Credit Union Administration (NCUA) to a private insurer. The $500 million asset, Austin, Texas-based credit union’s board of directors unanimously decided to make the conversion, with support from credit union management, so Velocity “can deliver greater coverage to our members and better manage the cost of operations as it relates to deposit insurance,” the credit union said in newsletter mailed to members Aug. 26. “In 2009, due to estimated losses in the NCUSIF, the credit union’s federal deposit insurer announced a premium affecting all federally insured credit unions,” the Velocity newsletter said. “As a result, Velocity CU has been assessed a premium in 2009 of $675,106. This additional cost for federal deposit insurance adversely affects the credit union’s earnings and net capital in 2009. This premium will not affect the level of federal share insurance on members’ accounts. “As a state-chartered credit union in good standing in Texas, Velocity CU has the option of insuring member accounts through American Share Insurance Corporation (ASI), the nation’s largest credit union-owned private deposit insurer, and not the NCUA,” Velocity added. ASI is based in Columbus, Ohio. In a postcard mailed to members Tuesday, Velocity said: “ASI is a credit-union owned private deposit insurer founded in 1974 by credit unions to provide a viable alternative to federal deposit insurance that members trust and rely on. Currently, [more than] 1.3 million members belong to credit unions insured by ASI.” Ballots were mailed to Velocity members Nov. 30 and also are available in its branches, the credit union said. Federal regulations require that all members be given the opportunity to vote on the proposition to cover deposit insurance, and that a minimum of 20% of the membership must vote, Velocity said in a postcard to members. News Now received the information sent to credit union members concerning the deposit insurance conversion from Brie Franco, Velocity vice president and general counsel. The credit union did no want to comment on the matter because of federal regulations that prevent it from influencing or compromising the membership vote. “While the board unanimously supports the decision to consider converting deposit insurance to ASI, the actual resolution to do so has not been made or passed,” Board Chairman Carl Lynch said in the member newsletter. “We are anxious to hear from our members, and we are hopeful you will support this move to change deposit insurance coverage.”


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