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Impact of stabilization law being weighed by NCUA
ALEXANDRIA, Va. (5/22/09)—National Credit Union Administration (NCUA) Chief Financial Officer Mary Ann Woodson will launch an analysis of the cost effect to the agency of newly enacted provisions to create a corporate credit union stabilization program. Just one day after President Barack Obama signed S. 896, the Helping Families Save Their Homes Act, into law, NCUA Vice Chairman Rodney Hood inquired during an open board meeting what the financial impact would to the agency. Woodson said she needed to complete her analysis of the final bill and would report back to the board. Although she did not address the timing of that report, Woodson did tell News Now that the information would be made public when available. Under S. 896, NCUA borrowing authority is increased to $6 billion, with a possible further extension to $30 billion under exigent circumstances. Credit unions may also spread the cost of National Credit Union Share Insurance Fund (NCUSIF) 1% deposit replenishment over seven years, and have up to eight years to deal with the cost of a premium assessment that has resulted from losses at wholesale corporate credit unions. Any impairment related to the NCUSIF replenishment may be booked over a seven-year period. The Credit Union Naitonal Association also is discussing the impact of the legislation on credit unions and the agency with NCUA and with accounting professionals. Also at the NCUA meeting, Woodson, during her regular NCUSIF monthly report to the board, noted a recent accounting change she executed, which removed $7.9 million from income. That income was associated with the agency's Temporary Corporate CU Liquidity Guarantee Program (TCCULGP), and the change was made to bring NCUA practices in line with those of the Federal Deposit Insurance Corp. TCCULGP provides an NCUSIF guarantee of principal and interest for debt issued under the program. Woodson noted the change was not significant enough to impact the NCUSIF net worth ratio. Other points of interest in the monthly report:
* There was a slight net loss of $2.5 million to the NCUSIF during April; the insurance fund remains in the black for the year-to-date; * The ending reserve balance is $5.4 billion, and reflects, in part, losses associated with the corporate credit unions; * There is a slight increase in low-ranked, CAMEL 4/5 credit unions, up 17 to 288 from the previous month, although up 49 from a year ago. Of the 288, 60% have assets less than $10 million, 30% have assets between $10 million and $100 million, and just 1.5% have $1 billion or more in assets. The remaining 8.5% fall in the $100 million to $1 billion category.
The monthly NCUSIF report is available online. Use the resource link below for access.
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