ALEXANDRIA, Va. – Credit unions are girding for a second major hit delivered by NCUA this morning, which is expected to approve a special assessment on credit unions of approximately 15 basis points, or $1.3 billion.
The special assessment, the second in as many years, would go to replenish dwindling reserves for the National CU Share Insurance Fund and is necessary to convince Congress that NCUA is well in control of the growing losses among credit unions. NCUA will report this morning that the reserve ratio for the fund declined below 1.2% (dollars reserved per $100 of insured deposits) as of Aug. 31, requiring NCUA to notify Congress and to provide lawmakers with a restoration plan.
The latest assessment follows a 13.4 bp, or $1.1 billion, charge assessed by NCUA in July to pay for the corporate credit union bailout.
The dual charges are expected to drive hundreds of credit unions into the red for the year, threatening many with the possibility of falling below minimum capital requirements, known as prompt corrective action, or PCA.
NCUA assessed two separate charges last year totaling $1.1 billion to pay the costs of the corporate bailout and to replenish NCUSIF reserves.