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Matz responds to CUNA urging to help CUs bear NCUSIF costs
WASHINGTON (3/22/10)—Responding to the Credit Union National Association’s (CUNA’s) urging to help credit unions deal with unprecedented National Credit Union Share Insurance Fund (NCUSIF) costs, Debbie Matz wrote that the National Credit Union Administration (NCUA) will look at the operating level target in the Fall. Matz, the NCUA chairman, noted in a March 18 letter to CUNA that while the Federal Credit Union Act sets a range between 1.20% to 1.50% for the NCUSIF equity ratio, the agency’s currently established target is 1.30%. At an open board meeting Thursday, NCUA Chief Financial Officer Mary Ann Woodson reported that the ratio currently stands at 1.23% and once the 1% deposit required of insured credit unions is collected next month, the ratio will rise to 1.26%. In her letter to CUNA, Matz wrote that the agency plans to revisit the operating level target in the Fall as part of the agency’s annual budget process. “At that point, the board will make a decision on whether to replenish the NCUSIF to 1.30% or let the level continue to decline. “That decision will be based on our experience in 2010 tracking several key economic and institutional factors,” the chairman said. She reiterated her commitment to “the safety and soundness regime maintained by the NCUA, and the public confidence instilled by a strong and credible NCUSIF,” a commitment she said will not be compromised “despite challenges” faced by the credit union movement. CUNA recommends that the NCUA temporarily reduce the normal operating level of the NCUSIF from the current 1.3% to no lower than 1.2%, to reduce the amount of funds that credit unions must pay into the insurance fund. CUNA also proposes allowing insured credit unions to spread out their NCUSIF costs over several years, "even if the normal operating level is at or above 1.2%, consistent with a restoration plan to ensure the NCUSIF is properly funded." Also in her letter, addressed to CUNA President/CEO Dan Mica, Matz noted CUNA’s close work with NCUA staff to draft enhancements to Senate legislation that would, in part, increase the member business lending cap to 20% of assets, up from 12.25%. “Our respective staffs worked closely and productively on enhancements to a Senate proposal, and I am hopeful that Congress will enact legislation that gives NCUA the ability to formulate what I believe will be a stronger regulatory regime that prudently fosters broader consumer access to small business capital. The Senate bill, the Small Business Lending Enhancement Act (S. 2919), has a counterpart in the House known as the Promoting Lending to America's Small Businesses Act (H.R. 3380).


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