Credit Unions to Pay for Corporate Credit Union System Rescue

On January 28, 2009, the National Credit Union Administration (NCUA) met to discuss the corporate credit union system. As a result of that meeting, NCUA issued a Letter to Credit Unions indicating each federally insured credit union will be paying a significant premium to the National Credit Union Share Insurance Fund (NCUSIF) to cover the costs of a $1 billion capital infusion to US Central Federal Corporate Credit Union, as well as the anticipated costs of a share insurance and liability guarantee program.   The estimated cost to the average credit union of the additional premiums and capital infusion will be approximately .62% on average assets in 2009.

 

As noted, there are two temporary programs involved related to borrowings to and deposits in corporate credit unions. The Temporary Corporate Credit Union Liquidity Guarantee Program (TCCULGP) provides an NCUSIF guarantee for unsecured borrowings by the corporate credit unions. The Temporary Corporate Credit Union Share Guarantee Program (TCCUSGP) will provide members who have NCUSIF-insured share accounts at a corporate with excess coverage above the current NCUSIF insurance limits of $250,000 through December 31, 2010.

 

All the details and costs are not yet clear on how this program will be accounted for (NCUA is to release details with the March 2009 call report instructions).   Once those are available, we will provide updates on the accounting and other ramifications to credit unions.