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2013 TCCUSF assessment will be eight to 11 bp

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WASHINGTON (11/16/12)--The 2013 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment will likely be between eight and 11 basis points (bp), and a National Credit Union Share Insurance Fund (NCUSIF) premium may not be assessed next year, the National Credit Union Administration (NCUA) announced at its Thursday open board meeting.

The NCUSIF assessment, the agency said, could be zero or as much as five bp.

Credit Union National Association (CUNA) Chief Economist Bill Hampel said the NCUA's TCCUSF assessment range is surprising.

"Based on the latest estimates of total remaining losses to be covered on the legacy assets posted by NCUA just last month, annual assessments of eight bp to 11 bp would cover the midpoint of expected losses in just 3.5 to 4.5 years. That seems unnecessarily short considering the stabilization fund has nine years remaining," he said.

Credit unions have already paid $4.1 billion in TCCUSF assessments, and the NCUA recently reduced the projected cost of corporate credit union stabilization assessments to between $6 billion and $8.9 billion. This represents a $400 million reduction from the previous maximum cost of $9.3 billion.

With the new estimates, credit unions will need to pay between $1.9 billion and $4.8 billion in additional assessments before the stabilization fund expires in 2021.

CUNA had suggested a 2013 assessment of closer to five bp, saying that level of TCCUSF assessment "would be sufficient to responsibly make headway on paying down the fund, pending further information on what the ultimate losses will actually be."

The NCUA expects to decide the level of the TCCUSF assessment next July, as it has done in the past.

The agency on Thursday also modified the Overhead Transfer Rate (OTR) for 2013 to 59.1%. The current OTR is 59.3%.

Under the Federal Credit Union Act, the NCUA may transfer funds from the NCUSIF to fund its administrative and other expenses related to federal share insurance. NCUA uses the OTR to allocate those expenses.

The agency will be reviewing the definition of what is "insurance-related" and may incorporate any changes in that definition when it sets the OTR for 2014.

According to the agency, the planned 2013 modification in the OTR is due to the following factors:
  • Modification of the state supervisory authority (SSA) Imputed Value calculation to include certain costs;
  • The 2013 workload budget for federal examination and supervision was reduced by over 1,794 hours;
  • The 2013 workload budget for state examination and supervision increased by over 8,191 hours;
  • Examiners reported spending 67.3% of their examination and supervision time on insurance related procedures for the time survey ending in 2012, compared to 65.1% in the previous survey cycle; and
  • The 2013 budget of $251.4 million for the cost of NCUA resources and programs increased over the previous year's budget of $236.9 million.
For more on the NCUA meeting, use the resource link.

CUNA outraged by NCUAs proposed 2013 budget

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WASHINGTON (11/16/12)--The Credit Union National Association (CUNA) is outraged by the National Credit Union Administration's (NCUA) planned 2013 spending increase, and will be pursuing this with other policymakers to achieve greater accountability and transparency in the agency's budgetary process, CUNA President/CEO Bill Cheney said Thursday.

Click to view larger image NCUA Chairman Debbie Matz, center, said the NCUA is "committed to running the agency as efficiently as possible," and called the NCUA"s yearly budgets sound investments for credit unions. (CUNA Photo)
The NCUA approved a 2013 budget of $251.4 million. This spending plan represents an increase of 6.1% from 2012's NCUA budget. The NCUA noted that this 6.1% increase is a lower rate than the projected 6.5% increase in credit union industry assets.

The total amount of 2013 funding increase is $14.5 million, and $12.8 million of this increase would go to possible staff pay increases, employee benefits, locality pay, and full funding for full-time employees (FTEs) that were only partially funded in 2012, according to the NCUA.

The agency noted that this number could change if Congress does not approve a federal employee pay increase for next year.

The NCUA also plans to add $150,000 in new administrative expenses, an increase in contract service expenses of about $980,000 and $800,000 in new travel expenses.

Employee pay and benefits account for 73%, or $183.6 million, of the 2013 budget, which does not call for any changes in the number of FTEs.

"This is a realistic, responsible and prudent budget. It's a sound investment for credit unions to protect their bottom lines and the Share Insurance Fund from any industry losses," NCUA Chairman Debbie Matz said. Matz said the agency's 2013 budget also "sends a strong signal" that credit unions are improving.

"For credit unions, this budget increase is exasperating, particularly as other federal financial institution regulators have held the line on their own budgets," Cheney countered. "Clearly, the NCUA believes it has no reason to take a similar line--one that the President of the United States has personally mandated for federal agencies."

The 2013 budget represents the fourth-straight year that the agency has increased its budget. Cheney said the issue of ever-increasing budgets "necessitates greater oversight, accountability and transparency.

"We will express our deep concerns to the Obama administration, as well as lawmakers regarding oversight of the NCUA's budget. The agency must be held accountable for its budget decisions--and we intend to ensure that will happen," he added.

NCUA Chief Financial Officer Mary Ann Woodson, who presented the budget at the NCUA open meeting, said the agency will take steps to make budget information easier to find on the NCUA's website. CUNA earlier this week urged the agency to provide more transparency to credit unions about its budget decisions, before and after the budget is adopted in final form. A website detailing NCUA budget information could help create this much needed transparency, the CUNA letter noted.

The 2013 operating fee for federal credit unions will increase by 0.24% as a result of the new budget. The NCUA also approved a 6.5% increase in the asset dividing point for the 2013 operating fee scale that the agency uses to determine the fee assessed to federal credit unions. The corporate federal credit union rate scale remains unchanged, and federal credit unions with less than $1 million in assets will not be assessed an operating fee for 2013.

The operating fees for federal credit unions, which will be assessed based on assets as of Dec. 31, 2012, will be due to NCUA no later than April 30, 2013.

Warren praises CUs may head to Banking Committee

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WASHINGTON (11/16/12)--In her victory speech the night of the Nov. 7 federal elections--now on YouTube and being circulated by the Massachusetts Credit Union League--Senator-elect Elizabeth Warren (D-Mass.) thanked credit unions for their support.

In including credit unions in her long list of thank yous, Warren said, ""Credit unions…yes…love my credit unions.'' She added that "all of you have my back and I promise you, I'll have your back."

Warren, a Harvard Law School professor who conceived and helped set up the Consumer Financial Protection Bureau (CFPB), was endorsed by the Massachusetts league.

According to Politico and other publications, Warren has received support from key Senate lawmakers, including Banking Committee Chairman Tim Johnson (D-S.D.), to join that panel if she is interested. The committee has oversight of credit unions and other financial institutions.

When announcing the league endorsement in July, Massachusetts league President Daniel Egan said Warren "has been a strong and vocal proponent of the benefits that credit unions provide to working families across the Commonwealth and around the country."

He added, "It is our hope and expectation that Elizabeth will be a United States Senator who will ensure that credit unions and their members have an advocate in the Senate because the big banks in this country already have enough of them."

The Credit Union National Association worked closely with Warren while she was setting up the CFPB and has developed a good working relationship with her.

Warren defeated Sen. Scott Brown (R-Mass.) 54%-46%.

Inside Washington (11/15/2012)

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  • WASHINGTON (11/16/12)--Regulators offered assurances that a final rule implementing Basel III capital and liquidity requirements will not harm community banks. At a Senate Banking Committee hearing on Basel III, officials from the Federal Reserve Board, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency said they are aware of the threat Basel III poses to smaller institutions. Regulators said last week they would indefinitely delay the U.S.' adoption of Basel III as they consider more than 2,000 comment letters they have received since issuing a series of proposals in June. The U.S., along with other member nations, had pledged to begin implementation of Basel III by Jan. 1. "To date, many commenters have raised concerns about the generally higher level of capital requirements for community banks," George French, FDIC deputy director for risk management, said at the hearing. "A number of commenters have requested that the agencies not apply the Basel III or standardized approach for notice of proposed rulemaking to community banks. Some commenters have requested that the agencies withdraw the standardized approach notice of proposed rulemaking" …
  • WASHINGTON (11/16/12)--Community bankers are fighting to extend the Transaction Account Guarantee (TAG) program beyond its current Dec. 31 expiration date, while at the same time exploring for alternative means of liquidity should the program end (American Banker Nov. 15). TAG, created by the Federal Deposit Insurance Corp. during the financial crisis, provides unlimited federal backing for noninterest-bearing deposits. Without an extension, community banks could lose accounts with more than $250,000 to bigger banks …
  • WASHINGTON (11/16/12)--The economic and financial market scenarios that will be used in an upcoming round of large financial institution stress tests were released by the Federal Reserve on Thursday. The stress test covers baseline, adverse, and severely adverse scenarios.Economic activity, unemployment, exchange rates, prices, incomes, and interest rates are among the 26 variables addressed in the stress tests …

NEW CUNA outraged by NCUAs proposed 2013 budget

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WASHINGTON (UPDATED: 12:15 p.m. ET, 11/15/12)--The Credit Union National Association (CUNA) is outraged by the National Credit Union Administration's (NCUA) planned 2013 budget increase, and will be pursuing this with other policymakers to achieve greater accountability and transparency in the agency's budgetary process, CUNA President/CEO Bill Cheney said today.

The NCUA today approved a 2013 budget of $251.4 million. This budget represents an increase of 6.1% from 2012's NCUA budget.

The total amount of 2013 budget increase is $14.5 million, and $12.8M of this budget increase would go to possible staff pay increases, employee benefits, locality pay, and full funding for full-time employees that were only partially funded in 2012.

The agency noted that this number could change if Congress does not approve a federal employee pay increase for next year.

The approved budget would require an increase in the operating fee for federal credit unions of 0.24%.

For more on the NCUA meeting, read News Now's Friday edition.