NCUA Board Approves Prepayment Plan (Misc News: June 29, 2011)
The NCUA approved a controversial plan to allow credit unions to prepay assessments to cover the cost of rescuing five corporate credit unions.
The board voted Wednesday morning to allow the prepayments to the Temporary Corporate Credit Union Stabilization Fund after addressing industry concerns. Click here to read CUNA's summary of the plan.
A key component of the revised plan is raising the aggregate amount required to go forward with the program from $300 million to $500 million, CU Times reported. It also moved to increase the maximum participation amount from 0.36 percent to 0.48 percent (48 basis points) of March 31, 2010, insured shares. Click here to read the story at CU Times.
CUNA News Now reported on its Twitter page - twitter.com/NewsNowLiveWire - that the NCUA expects the program to carry a $100,000 cost for administration. It said that the NCUA will not allow credit unions to prepay their entire assessment balance because it doesn’t want to create a safety risk.
If the credit union system can reach the $500 million goal, Corporate Stabilization Fund assessments would drop 6.4 basis points in 2011, CU Times reported.
NCUA Chair Debbie Matz said the agency is neutral on whether credit unions should participate.
“We are not encouraging or discouraging participation,” Matz said. “We are offering it as an option.”