Recap of NCUA's 6/24 Corporate Update Webcast

In an open webinar to credit unions yesterday, the NCUA announced revisions to the NCUSIF deposit assessment used to replenish depleted funds in the wake of corporate credit union liquidity problems. Additionally, NCUA announced reduction of the premium assessed to counteract increased insurance coverage.

The call began with an update on the Corporate Stabilization efforts based on three areas: liquidity, capital and conservatorship operations. Liquidity was labeled as “stable but tenuous” citing external borrowings at essentially zero with a NCUA supported cash supply of $18 billion ($20 billion of which came from NCUA/CLF). Other than temporary impairment (OTTI) losses at Wescorp and U.S. Central were stated at $5.7 billion and $1.7 billion respectively resulting in capital positions of $3.5 billion deficit at Wescorp and a $960 million surplus at U.S. Central.

The changes to the NCUSIF were made available in light of appropriations in H.R. 1106 or the “Helping Families Save Their Homes Act of 2009” which established a Temporary Corporate CU Stabilization Fund and gave credit unions access to $6 billion worth of borrowing authority from the Treasury, up from the previous $100M. The act also afforded NCUA the ability to stretch the Temporary Corporate CU Stabilization Fund premium over a 7 year period and the NCUSIF premium over an 8 year period.

Credit Unions Rising supporters submitted a variety of different questions, and several were directly addressed by the NCUA, including:

• If a credit union decides to switch charters will the assessment be refunded?
  • (Yes, in its entirety.)
• What is the plan for corporate restructuring following the ANPR?
  • (There will be change, but it will not be agency driven. The process will follow the schedule outlined in the slides:
    • Summer 2009: Develop the Rule
    • Fall 2009: NCUAB issues rule for comment
    • Winter 2009/2010: Outreach
    • Spring 2010: Final Rule)
• Is there an effort by NCUA to restructure the makeup of the credit union movement?
  • (No, not at all.)
• Can CUs opt to take the full assessment in 2008 instead of spreading the cost out over an extended period of time?
  • (Under generally accepted accounting principles (GAAP), they would be forced to follow the NCUA’s guidance, reporting the difference as income and paying premiums over the allotted period of time. )

The desire to “put the charge behind them” may become popular amongst the credit union community as the new legislation gives NCUA the power to charge as many assessments as they wish for as much as they wish over the next 7 and 8 years, issuing a minimum of a 90 day notice in advance.

Others questioned the possibility of even more drastic measures, discussing insurance and chartering options outside of the federal system. They were assured by the NCUA that their premiums would be 100% refundable after those transitions were complete.

After watching the event or reading this recap, what do you think about NCUA’s Corporate Update Event? Post reactions below and continue what will surely be an invaluable conversation on the future of the movement.