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CU comment wanted on operating fee plan
WASHINGTON (4/10/09)—The National Credit Union Administration’s (NCUA) plan to exclude investments in CU SIP or CU HARP from a credit union’s calculation of its operating fee is intended to encourage investment in those programs. The Credit Union National Association (CUNA) is asking credit unions to comment on whether there might be any hidden drawbacks to the proposal. The Federal Credit Union Act requires a federal credit union to pay an annual operating fee to the NCUA, but the agency has discretion in defining how the fee is determined. Under the NCUA’s current formula, there is a direct correlation between the amount of a credit union’s investments and its operating fee. The NCUA established CU SIP, or the Credit Union System Investment Program (CU SIP), and CU HARP, or the Credit Union Homeowners Affordability Relief Program, late last year as part of its effort to stabilize the corporate credit union system. Under CU SIP, credit unions borrow from the Central Liquidity Facility (CLF) and then invest those proceeds in a corporate credit union. Under CU HARP, credit unions borrow from the CLF and then invest those proceeds in a two-year guaranteed CU HARP note issued by a corporate credit union. CU HARP funds are used to modify mortgages at risk of default. The NCUA has encouraged credit unions to participate in both CU SIP and CU HARP. However, the agency said in March it is concerned that since investments in both these programs result in increased operating fees, some credit unions will refrain from participating. The agency will accept comments on its proposal until May 4. CUNA requests credit union comment by April 21. In addition to identifying any unintended consequences that could occur under the proposal, CUNA also asks for credit union comment on any other changes that could help increase CU SIP and CU HARP participation. Use the resource link to read the CUNA comment call.


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