Advocacy efforts are more than just legislative grassroots engagement; they encompass PR messaging on the industry to shape public opinion, and regulatory advocacy to shape the rules and regulations that impact the industry. And like legislative engagement, it takes time, thoughtful research and consistent interaction between the regulatory bodies and credit unions to create a positive open dialogue to achieve what is sensible for the industry.
This process was illustrated nicely last week, when after research and discussions with the joint boards of credit unions after the Idea Institute, credit unions, as well as private intel with NCUA, GCUL filed the comment letter linked here on NCUA’s request for comments on the proposal to close the Temporary Corporate Credit Union Stabilization Fund ahead of schedule and to set the Normal Operating Level (NOL) of the National Credit Union Share Insurance Fund (NCUSIF) on September 5th. The GCUL letter supported NCUA’s closing the fund and merging the fund assets into the NCUSIF, and repaying credit unions as much as possible in 2018.
Background:
- The Federal Credit Union Act authorizes that once certain conditions were set NCUA had the authority to close the Stabilization Fund early, if NCUA distributed the assets remaining in the fund to the NCUSIF.
- The letter recommended that NCUA set a temporary increase to the normal operating level of the NCUSIF to 1.34 percent, which should be a level sufficient to prepare for a moderate recession. This is in opposition to the proposal which recommended increasing the normal operating level of the NCUSIF to 1.39 percent.
- The equity ratio of the fund is about 1.25 percent, and is anticipated to hit 1.20 percent in 2018. In general, NCUA is to weigh premium assessments when the fund is projected to breach the 1.20 percent threshold.
The NCUA fund consolidation proposal calls for building toward 1.39 percent with the following rationale: Base of 1.20 percent, 0.04 percent for the legacy asset unpredictability, 0.02 percent for 2019 deterioration and 0.13 percent for moderate recession expected losses. The 0.04 percent should be considered temporary – used only if needed – and not part of a new higher target ratio.
