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Washington
Low minimum hindered prepay plan CUNA
WASHINGTON (8/3/11)--A higher minimum size for the National Credit Union Administration’s (NCUA) proposed prepayment program for corporate credit union stabilization assessments would have attracted more credit union participation, the Credit Union National Association (CUNA) noted when the agency announced Tuesday it had not received sufficient credit union pledges to go forward with the plan. The NCUA had set a threshold of $500 million in credit union pledges to prepay their assessment in order to trigger a prepayment plan. Last Friday was the deadline for credit unions to commit to the program, and the NCUA announced yesterday that 799 federally insured credit unions pledged a total of $369.9 million. CUNA President/CEO Bill Cheney said of the news, “It’s unfortunate that the minimum size of the program could not have been larger, as CUNA had recommended, so that the prepayment would have provided for a greater decrease in this year’s assessment.” He cited, by way of example, if the minimum size had been set at $1 billion, this year's assessment could have been reduced to about 12 basis points. “Had that been the case, credit unions may well have found that the program would be more attractive, and they might have committed substantially more to the program,” Cheney said Tuesday. NCUA Chairman Debbie Matz noted in her announcement of the pledge figures, “While the pledges fell short of meeting the required threshold to move forward, the NCUA board remains open, perhaps, to reconsidering this issue next year.” Having missed the $500 million trigger, the NCUA noted it will not debit any voluntarily pledged amount from any credit union. CUNA’s Cheney also said, “For the many credit unions experiencing improved earnings in 2011, this year’s higher assessment will be manageable. However, for a number of hard-hit credit unions still recovering from the recession, even a modest reduction in this year’s assessment would have been welcomed. Nevertheless, the very fact that the prepayment plan is not going forward means that next year’s assessment should be about half of this year’s projected rate of 25 basis points.”


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