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Washington
Costs of corporate stabilization plan on CUNA site
WASHINGTON (2/5/09)--The Credit Union National Association (CUNA) has posted two pieces of information to its website that will help credit unions estimate the effects of the National Credit Union Administration’s (NCUA) Corporate Stabilization Program on their credit union. CUNA also has posted to its website homepage a link to consolidated resources addressing the agency's stabilization plan. The link includes information on the NCUA's plan, CUNA's call to action and analysis, related News Now stories, and more Regarding the effects-estimation materials, CUNA Senior Economis Mike Schenk said, "The NCUA’s recently announced corporate stabilization program raised many questions from credit unions. The most common of these seems to be ‘What does it mean for me?’ and ‘What will this cost?’ To help credit unions answer those questions, we’ve posted several Excel worksheets on the CUNA website.” One worksheet explains the proposal’s effects on the credit union movement as a whole. The other can be used as a template for credit unions to input their data and estimate program costs. NCUA’s stabilization plan consists of a $1 billion infusion and an initial estimate of $3.70 billion to guarantee corporate deposits. The $3.70 billion corporate share guarantee is an estimate of the total costs associated with a corporate deposit guarantee--it may understate or overstate the true cost of that guarantee. NCUA has engaged PIMCO to analyze corporate investments--and the results of that analysis will be used to more accurately determine the total costs, Schenk said. The final cost estimate also will depend on the stability of corporate funding. The more stable and long-term the funding, the lower the final costs will be. In any event, CUNA, state credit union leagues and others are working with the NCUA to explore alternative funding mechanisms that would ease the financial burdens of the initial plan. If the efforts are successful, the assessment rate could be reduced. For more information, use the link.
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