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NCUA expenses 170M to cover future CU losses
ALEXANDRIA, Va. (5/21/10)--The National Credit Union Administration (NCUA) on Thursday reported that it has expensed an additional $170 million from the National Credit Union Share Insurance Fund (NCUSIF) to its reserves to cover future losses related to natural person credit unions. The NCUSIF's reserves, which would be used to pay for future natural-person credit union losses when they occur, currently stand at $896.3 million total. NCUA Chief Financial Officer Mary Ann Woodson reported that the NCUSIF has incurred $177.4 million in total insurance loss expenses during 2010. The agency has expensed those funds for accounting purposes to set them aside to cover future losses related to credit union failures that may occur. Woodson reported little change in the number of CAMEL Code 3, 4 and 5 credit unions that were reported last month. THE distribution of assets in troubled, low-ranked CAMEL credit unions also hasn't changed much since January, Woodson added, and other NCUA staff indicated that the growth of troubled credit unions has slowed somewhat. NCUA staff also noted that there are several positive signs within the credit union system that indicate that the overall soundness of credit unions may be improving. However, they cautioned the board, saying that they would wait to see the next set of quarterly reports, which are due out on June 30, and continue to monitor the condition of troubled credit unions this summer before they can make a determination on the overall health of the credit union system. While NCUA staff noted that the NCUSIF and Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessments would likely amount to between 15 and 40 basis points combined, staff indicated that total expenses and share growth would factor into that decision. The total amount of reserves will also play a role in the NCUA’s determination, which is expected to be made this fall. The NCUA will also consider splitting the fees used to maintain its the NCUSIF and the TCCUSF at that time for billing purposes, according to NCUA Chairman Debbie Matz, in order to help clarify which assessed funds are for the TCCUSF to cover corporate credit union losses and which funds are for the NCUSIF to cover natural-person credit union losses. (See News Now, NCUA to consider splitting share insurance, corp. fees, May 14.)


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