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TCCUSF assessment is likely 25 bp
ALEXANDRIA, Va. (8/29/11)--The National Credit Union Administration’s (NCUA) 2011 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment, which is set to be announced at an NCUA board meeting later today, will likely be around 25 basis points (bp) of total insured shares, Credit Union National Association (CUNA) Chief Economist Bill Hampel has said. The 25 bp assessment, which would be consistent with prior NCUA assessment projections, would bring in around $2 billion in revenue. NCUA Deputy Executive Director Larry Fazio earlier this year said the agency would need to charge between $7 billion and $9 billion in future assessments to pay for the remaining losses from troubled assets at corporates, and added that he could not predict how long the NCUA would need to continue charging TCCUSF assessments. Hampel said after this year’s $2 billion assessment, the agency is likely to collect about $1 billion a year until the full costs of corporate stabilization are paid off. That would represent an assessment next year of around 12 bp of insured shares. The agency has not yet said whether an NCUSIF assessment will be charged this year. However agency officials have indicated that a premium this year is unlikely. Hampel has predicted that because of the gradually improving condition of troubled credit unions and the substantial funding of NCUSIF’s reserves, a premium is unlikely for the foreseeable future. The NCUSIF held $1.2 billion in reserves as of June, and NCUA board member Gigi Hyland this summer suggested that the agency could consider lowering its NCUSIF reserve level. The NCUA's Office of Examination and Insurance was scheduled to complete an analysis of the NCUSIF's reserve levels earlier this summer. The condition of the Federal Deposit Insurance Corp.’s (FDIC) Bank Insurance Fund has also improved, leading some banks to call for a return of their prepaid premium assessments for 2010 through 2012. However, Hampel said those prepayments were for liquidity rather than equity reasons. He added, “because of FDIC’s new policy to increase the Bank Insurance Fund to at least 2% of insured deposits, banks are likely to see FDIC premiums for at least a decade.” The agency at today’s meeting will also address a proposed rule related to Part 704 on corporate credit unions and discuss maintenance of the NCUA Guaranteed Notes (NGNs).


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