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NCUA tech amendments bill passed by House
WASHINGTON (12/23/10)—The House on Wednesday approved a technical corrections bill that would provide the National Credit Union Administration (NCUA) with new tools to address both troubled individual credit unions and the larger corporate credit union crisis. The legislation, S. 4036, will alter the Federal Credit Union Act by permitting the NCUA to make payments to the Temporary Corporate Credit Union Stabilization Fund without borrowing from the U.S. Treasury. The National Credit Union Share Insurance Fund (NCUSIF) will also be addressed, as the legislation clarifies that the equity ratio of the NCUSIF is based solely on the unconsolidated financial statements of the NCUSIF. Credit Union National Association President/CEO Bill Cheney said that Congress, in passing the legislation, took important action that will help credit unions better serve their members through the current economic crisis. “Credit unions will be stronger, will be able to keep their workers employed, and will remain ready to help their members effectively deal with the financial turmoil of the day,” Cheney added. NCUA Chairman Matz said that the technical amendments will “significantly enhance the ability of NCUA to manage the NCUSIF and the Stabilization Fund in the most efficient way possible.” The legislation will also give credit unions the ability to count section 208 assistance as net worth for the purposes of prompt corrective action (PCA). A Comptroller General-led study of the NCUA is also required by the legislation. That study will seek to determine the reasons for the failures of any corporate credit union since 2008 and evaluate the adequacy of the NCUA's response to the failures of the corporates, including how taxpayers were protected, how moral hazards were avoided, whether potential costs were minimized in the resolution process, and "the ability of insured credit union to bear any assessments levied to cover such costs." The study will also evaluate the effectiveness of the NCUA’s PCA implementation and examine whether the agency has been effective in implementing recommendations made by its Inspector General and contained in Material Loss Review Reports. The Comptroller General will report to the Senate Banking Committee and House Financial Services Committee within six months after the legislation is enacted.


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