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CUNA Report: NCUA Assessments Less Than Those Paid By Banks   (Misc News: November 30, 2010)

Here’s another way to explain why banking with a credit union is better than going with a bank: lower federal deposit insurance fund assessments.

An analysis by CUNA shows that NCUA assessments during the last three years have averaged 25 percent less than assessments by the FDIC charged to banks during the same period.

A CUNA white paper, which examines past insurance fund assessments and projects the likely amounts of future assessments, found that the FDIC's assessments levied since the beginning of 2008 have totaled 47 basis points (bp) of total deposits, equivalent to 52 bp on insured deposits. The

NCUA's total assessments have totaled 41 bp of insured shares over that same time period, a number that is nearly one-fifth below the amount charged by the FDIC.

Both federal regulators are expected to impose large assessments on insured institutions to restore insurance fund balances in the near term. CUNA projects that combined credit union assessments for both the NCUSIF and corporate stabilization charges will likely average eight bp per year until 2021, for a total of 90 bp. But CUNA is also projecting that the FDIC’s assessments will total 144 bp by 2021, well more than 50 percent above the amount that will be paid by credit unions.

CUNA noted that it’s projections are estimates and could change. Much depends on the strength of the economic recovery. If it’s slower than expected, future assessments will be higher, but if it’s stronger, future assessments could be less.

"We are now facing the highest deposit insurance assessments for banks since the early 1990s, and for credit unions since the NCUSIF was capitalized in its current form in the early 1980s" said Bill Hampel, CUNA's chief economist. "This is the unfortunate consequence of the worst financial crisis in the U.S. since the 1930s.”

Click here to read the CUNA report.

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