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New law helps CUs says California newspaper
INLAND VALLEY, Calif. (5/22/09)--Local credit unions struggling to pay increased deposit insurance fund fees will obtain some relief now that President Barack Obama has signed S.896, the Helping Families Save their Home Act, into law, a California newspaper said. Obama signed the law Wednesday. Of interest to credit unions are portions of the bill that will create a corporate credit union stabilization program to help credit unions weather the ongoing financial crisis and extend the $250,000 share and deposit insurance coverage ceiling until 2013 (News Now May 21). Credit unions may also spread the cost of National Credit Union Share Insurance Fund (NCUSIF) replenishment over a longer period of time. They will have a total of eight years to deal with the cost of a premium assessment that has resulted from losses at some wholesale corporate credit unions. Premiums are based on asset size. Any impairment related to the NCUSIF replenishment may be booked over a seven-year period. For Altura CU, a $900 million asset Riverside, Calif.-based credit union, the passage of the law allows it to pay $6.2 million in insurance-fund fees amortized over eight years (Inland Valley Daily Bulletin May 21). “It’s a good thing, because we don’t have to take the [$6.2 million] hit all at one time,” Mark Hawkins, Altura president/CEO, told the newspaper. Arrowhead CU, San Bernardino, Calif., will pay $5 million over seven years, and $2.2 million over eight years into the NCUSIF, the paper added. Arrowhead has $1 billion in assets. Amortization plans are similar for all credit unions, Debbie Kwon-Moore, director of federal governmental affairs for the California Credit Union League, told the paper. Without the new legislation, the burden of having to pay NCUSIF all at once could have caused many credit unions to go out of business, she added.
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