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Cheney to NCUA Amend corporate prepayment plan
WASHINGTON (7/5/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney has suggested that the National Credit Union Administration (NCUA) amend its corporate credit union assessment prepayment program to allow total prepayments of as much as $1 billion and apply all prepayments to a reduction in 2011 fund assessments. In a Friday letter to the agency, Cheney noted that credit unions have said that they are disappointed by the NCUA’s decision to limit the Temporary Corporate Credit Union Share Insurance Fund (TCCUSF) plan to only $500 million in prepayments. Doing so would reduce the 2011 TCCUSF assessment by 6.4 basis points (bp), and member credit unions have told CUNA that “at that level, it’s just not worth it,” Cheney said. Cheney suggested that 2011’s assessment could be further reduced if the agency made better use of the TCCUSF’s $6 billion line of credit from the U.S. Treasury. “If the agency would be willing to allow the balance at Treasury to remain as high as $5.5 billion through 2013, the prepayment plan could be allowed to rise to $1 billion, and this year’s assessment could be reduced by as much as 13 bp,” Cheney said. The CUNA CEO added that Treasury officials have been “supportive” of using the borrowing authority “to even out assessment expenses for credit unions.” The NCUA’s prepayment plan, which was approved at last Wednesday’s special open board meeting, would allow credit unions to prepay some TCCUSF assessments. The agency has set the target size of the program at $500 million, and the program will not be implemented if less than $500 million is committed. Credit unions may commit a maximum of 48 bp of their total insured shares as of March 31, 2011 to the fund. The NCUA will cover additional details of the plan at a July 11 webinar. (See related story: NCUA announces July 11 corporate prepayment plan webinar) For the full letter, use the resource link.


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