Friday, July 21, 2017

NCUA Proposes to Close TCCUSF and Raise NCUSIF Equity Ratio to 1.39 Percent

The National Credit Union Administration (NCUA) Board is seeking comment on a proposed plan to close the Temporary Corporate Credit Union Stabilization Fund (TCCUSF)and to raise the equity ratio of the National Credit Union Share Insurance Fund (NCUSIF) from 1.30 percent of insured shares to 1.39 percent of insured shares.

The TCCUSF was created in May 2009 to handle the resolution of failing corporate credit unions. Without the creation of the TCCUSF, the NCUSIF would have exhausted its retained earnings and would have impaired a significant portion of insured credit unions' one percent NCUSIF capitalization deposit.

The TCCUSF is currently scheduled to be closed in 2021; however, the Federal Credit Union Act gives the NCUA Board the authority to close it before the scheduled closure. The NCUA Board is proposing to close the TCCUSF in 2017.

At closing, the assets and liabilities of the TCCUSF would be distributed to the NCUSIF, as required by law. This distribution will increase the net position and equity ratio of the NCUSIF. NCUA is estimating that the year-end NCUSIF equity ratio will be between 1.45 percent and 1.47 percent of insured shares.

The Board noted that given the nature of the assets and liabilities of the TCCUSF, this could increase the potential volatility of the NCUSIF equity ratio.

The Federal Credit Union Act defines the normal operating level of the NCUSIF equity ratio as between 1.20 percent and 1.50 percent of insured shares.

NCUA proposes to raise the normal operating level to 1.39 percent to help ensure the Share Insurance Fund has sufficient equity to withstand a moderate recession without the equity ratio falling below 1.20 percent, at which point a premium or fund restoration plan would be required by statute.

The NCUA expects that credit unions will receive a NCUSIF distribution (dividend payment) between $600 million and $800 million for 2018.

Comments are due by September 5.

Read the press release.


  1. Read somewhere or heard from a consultant that ncua probably are raising the level to greater than 2% so is this the first step?

    1. The Federal Credit Union Act caps the NCUSIF equity ratio at 1.50 percent of insured shares. However, NCUA issued a white paper seeking legislative authority to raise the equity ratio to at least 2 percent.

  2. That was during the days of a banker chairing the NCUA Board. Only way that happens if banks are subject to the BIF having a two percent equity ratio.

    1. A banker ran the NCUA board?
      News flash, the bif is being raised.



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