Removing Barriers Blog

CUNA Submits Comments to NCUA on Share Insurance Equity Distribution
Posted September 05, 2017 by CUNA Advocacy

Today CUNA filed a comment letter with NCUA providing input on how the agency should amend is share insurance rule to provide for equity distributions. The proposed share insurance fund equity distribution rule would modify the rule for normal equity distributions and has a separate provision for special distributing funds from the Temporary Corporate Credit Union Stabilization Fund (TCCUSF or Stabilization Fund) after it is merged into the National Credit Union Share Insurance Fund (NCUSIF). 

CUNA proposed that NCUA prorate all refunds during the special distribution period on the basis of total stabilization assessments paid by each credit union from 2009 to 2013. Specifically, NCUA should first aggregate the total assessments paid by each credit union, and calculate each credit union’s share of the total equity to be transferred from the Stabilization Fund to the Share Insurance Fund based on its share of total assessments collected. Next, NCUA should debit this amount for each credit union by the amount necessary to increase the NCUSIF equity ratio to its historical NOL of 1.3% based on each credit union’s current insured shares. Furthermore, should NCUA decide to raise the NOL above 1.34% for reasons having to do with the Share Insurance Fund’s future projected operations (an increase CUNA does not support), the amount necessary to make that increase should be debited to total assessment refunds based on current insured shares. It should be noted that CUNA supports a NOL of 1.3%, but we will not oppose NCUA’s proposed 4 basis points while the NCUSIF holds volatile assets from the TCCUSF. 

This method would be transparent and equitable, which is important in the repayment of credit unions’ money.  CUNA also reminded the NCUA of the following:

  • CUNA agrees with NCUA’s legal analysis that TCCUSF repayment cannot be made from the TCCUSF and can only be made from the Fund NCUSIF after the funds merge; any other opinion is not based on sound legal analysis.

  • CUNA supports commencing distributions as early in 2018 as possible. Further, in the event that distributions do not begin in 2018 because the two Funds are not merged this year, CUNA urges that no premium be charged this year in consideration of the fact that substantial equity will be available to Share Insurance Fund from the Stabilization Fund in the next few years.

  • CUNA supports a temporary 4 basis point increase in the normal operating level (NOL) while the Fund holds corporate legacy assets in addition to traditional Treasury securities.  However, we insist the increase be temporary – and phased down from 1.34% in 2018 to 1.3% in 2021 as the relative exposure to the legacy assets diminishes.