NCUA Board Votes to Close TCCUSF

Last month, MCUL announced its support of NCUA’s plan to close the Temporary Corporate Credit Union Stabilization Fund (TCCUSF). In a huge victory for credit unions, the NCUA Board has since voted to close the TCCUSF. Barring some unforeseen economic downturn, credit unions will receive a Share Insurance Fund Dividend in 2018 with the possibility of more to come later.

The League was an early and strong advocate of NCUA's plan. In May 2017, MCUL, together with 113 Michigan credit union CEOs, called upon the NCUA board to merge the TCCUSF into the NCUSIF. This success speaks volumes to the power of the CUNA/League system.

According to NCUA, credit unions should receive a rebate or dividend in 2018 between $600 million to $800 million. NCUA also stated that credit unions will receive between $600 million to $1.1 billion in dividends between 2019 through 2021. Furthermore, corporate capital holders could have between $1.1 billion and $1.9 billion returned to them in 2021. It’s important to note that future dividends and capital returns are dependent on the performance of assets and the economy.

The Board also voted to set the National Credit Union Share Insurance Fund’s normal operating level (NOL) at 1.39%, which the NCUA Board supported with analysis from the Federal Reserve. The NOL at 1.39% is higher than MCUL and CUNA advocated for but not unreasonable when one considers further risk. NCUA indicated that 4 basis points are temporary for additional risk from legacy assets. The other 5 basis points are to provide additional cushion in case of an economic downturn. Here, it’s important to note that the Share Insurance Fund will likely take losses from credit unions involved in taxicab medallion lending or those holding a large number of medallion participation loans.

“While NCUA’s decision was not perfect, given its insistence on increasing the NOL to 1.39 percent, MCUL still applauds Chairman McWatters and the Board for the decision to merge the funds and get money back to credit unions as soon as possible,” said MCUL CEO Dave Adams. “It was the only legal and expeditious way to get money back from the government and into the portfolios of credit unions where it can work for members’ interests. We thank our Michigan credit union community for its strong, early grassroots lobbying in support of the merger.”