MCUL Supports NCUA's Plan to Close TCCUSF; Concern Remains with Rise in Normal Operating Level
The Michigan Credit Union League (MCUL) submitted a comment letter to the National Credit Union Administration (NCUA) on Sept. 1, affirming its support for NCUA’s proposal to merge the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) into the National Credit Union Share Insurance Fund (NCUSIF).
In May 2017, MCUL, together with 113 Michigan credit union CEOs, called upon the NCUA board to merge the TCCUSF into the NCUSIF. The merging of these funds will allow an influx of premiums to be paid back to credit unions and, ultimately, their member owners.
While MCUL expressed its support of the agency’s proposal to merge the two funds, the League also took the opportunity to address its concern with NCUA’s proposed increase of the NCUSIF’s normal operating level (NOL). NCUA has proposed a significant increase from 1.30 percent, to 1.39 percent.
“We’re pleased to see the NCUA taking sensible and timely steps to merge the TCCUSF and the NCUSIF,” said MCUL CEO Dave Adams. “However, we strongly oppose the proposed arbitrary and unnecessary increase in the fund’s normal operating level.”
MCUL firmly believes that the NCUA’s proposal to increase the NOL ratio is unnecessary, and furthermore, ignores the fact that the current NOL of 1.30 percent served credit unions well during the recession — the largest financial crisis since the Great Depression. In its comment letter, MCUL also suggested that maintaining the current NOL of 1.30 percent would allow for a larger refund to credit unions, while still topping the NCUSIF off at 1.30 percent. Instead of a potential refund range of $600-$800 million, credit unions could collectively see refunds of more than $1 billion should the NOL remain at 1.30 percent.
Rather than credit unions receiving reduced distributions simply because the NCUA is proposing to create a buffer for hypothetical future losses, MCUL advocated for credit unions to receive a larger refund now. Should the NCUA deem it necessary in the future, it could assess a premium to credit unions as authorized and required under the Federal Credit Union Act.
MCUL will continue to work with CUNA to advocate for the best interest of credit unions both in Michigan and nationwide.Go to main navigation