WASHINGTON (12/13/11)--The Credit Union National Association (CUNA) is recommending to the National Credit Union Administration (NCUA) that a credit union leaving the system by converting to private insurance or a bank charter should be required to provide its share of future temporary corporate credit union stabilization fund assessments to recognize liabilities incurred as a federally insured credit union.
CUNA's analysis reviewed the issues surrounding how requirements to obtain such assessments would work and determined that the NCUA has the legal authority under the federal credit union act to adopt such requirements.
Some credit unions have raised concerns about the basic issue that remaining credit unions should not be left to cover the assessments that a credit union exiting the system would avoid.
The NCUA is on record as having advised the National Association of State Credit Union Supervisors--NASCUS--and others that a converting credit union cannot be assessed for all future assessments in a single payment prior to conversion, but that issue is different from key ones raised by CUNA and the alternatives CUNA has presented.
CUNA's recommendations would require a credit union leaving the system to set up an escrow account as part of its conversion, one that is comprised of funds representing a general estimate of that credit union's future assessments.
The account would be managed by the NCUA and future payments would be made out of the account as they are assessed on all federally insured credit unions.
CUNA has noted that this structure for future payments is intended to avoid triggering an accounting event that would make all federally insured credit unions recognize all remaining assessments immediately as an expense. CUNA also has identified several other accounting issues associated with the plan and is pursuing those with credit union certified public accountants.
CUNA has initiated early meetings with federal financial regulators on this TCCUSF issue, including NCUA, as well as the Federal Deposit Insurance Corp. (FDIC). The FDIC coordinates with the NCUA regarding a conversion to a federally insured bank or thrift.
CUNA will follow up with the FDIC as discussions with the NCUA proceed. CUNA also is pursuing meetings with other policymakers including the Office of the Comptroller of the Currency.