The clock is ticking – rapidly – for credit unions and other stakeholders to give input on the National Credit Union Administration’s proposal to close the Temporary Corporate Credit Union Stabilization Fund and make a Share Insurance Fund distribution in 2018.
Rick Metsger, former chairman and current NCUA board member, on Thursday noted the deadline for submitting comments to the regulator is Sept. 5.
While speaking at the National Association of State Credit Union Supervisors’ annual summit in San Diego, Metsger said NCUA, “will carefully weigh all points of view.”
“The agency has been working diligently to have everything in place to close the fund before the end of the federal fiscal year on Sept. 30,” Metsger said in prepared remarks. “We must do that in order to complete a final audit before the end of the year, which we need to do to give credit unions a distribution in 2018. If we accomplish all that, it would eliminate the need to charge a Share Insurance Fund premium at this time.”
As reported earlier this month in CU Journal, the NCUA board approved a proposed plan to close the Stabilization Fund at its July open meeting. The proposal includes increasing the normal operating level of the Share Insurance Fund to 1.39 percent from the current 1.30 percent. The agency anticipates a distribution of between $600 million and $800 million to credit unions next year.
“I do note that one trade organization, NAFCU, has asked now that we delay closing the fund at this time,” Metsger said. “That, of course, would delay until at least 2019 any potential distribution to credit unions as well as put a premium back on the table to address the declining equity ratio in the Share Insurance Fund. There are still a few days left for credit unions to comment on closing the fund, and I encourage them to do so. I will be interested in whether they support the trade association’s position to not close the fund at this time. We will carefully weigh all points of view.”
Also on Thursday, the Credit Union National Association released a statement saying, “CUNA fully supports NCUA’s proposed plan to close the Temporary Corporate Credit Union Stabilization Fund, merge its assets into the share insurance fund and repay credit unions a portions of stabilization fund premiums in 2018.”
Proposed merger rule discussed
In addition to the proposed Stabilization Fund closure, Metsger’s remarks to NASCUS on Thursday covered several current issues, including the NCUA’s planned reorganization, cybersecurity threats, and the proposed agency rule requiring more information to credit union members when their credit union is contemplating a merger.
On the matter of the proposed mergers rule, Metsger said the agency is reviewing comments on the proposal, which NCUA asserts would provide credit union members with greater transparency on how their equity is spent during the merger process, so they can make an informed decision.
“When shareholders of public companies vote on a merger, they know they will be paid for their shares, often at a premium price, in exchange for tendering their ownership,” he said. “That isn’t how it works in the cooperative model, so member-owners should know if any insiders are getting enriched by their merger proposal and defend that position with full disclosure. The mechanics of providing that disclosure are still up in the air, and we have received numerous suggestions on how to refine the rule.”
Metsger also noted the reorganization of the agency, announced last month, is well under way and will “allow NCUA to be more efficient as we adapt with a changing industry.”