NCUA Communicates with CUs on Share Assessment (Monitor: June 28, 2010)
The NCUA issued a letter to credit unions Monday explaining the rationale for its decision, made at a June 17 board meeting, to require an assessment of just over 13 basis points for credit unions. The assessment is necessary to repay a portion of the $1.5 billion owed to the U.S. Treasury for corporate credit union stabilization. The letter makes clear that the decision was “not taken lightly” and that many factors were considered when determining the assessment specifics, including the “serious long-term consequences” that would result from foregoing the assessment this year.
Important to note for credit unions is that the assessment is calculated based on insured shares and deposits as of March 31. Credit unions should record the expense on the June call report using the National Credit Union Share Insurance Fund Stabilization Expense, account code 311. Invoices will be mailed to credit unions in late July or early August with payments due in mid-August.
Looking to the future, the NCUA explains in the letter that it will propose “a plan to remove the toxic assets that have depleted capital from investors in corporate credit unions,” and “finalize a new corporate credit union regulation that will prevent the concentration of high-risk assets and build a stronger buffer to protect capital.”
Credit unions are encouraged to read the full text of the letter at the NCUA’s Letters to Credit Unions webpage; the document is available in PDF or MS Word form. The need for the assessment is explained in detail, as well as its anticipated impact and NCUA efforts to minimize the expenses for natural person credit unions. Questions may be directed to the MCUL’s Compliance Helpline at (800) 262-6285, ext. 486.