House Committee Approves NCUA Request to Extend NCUSIF Restoration
Measures Will Assist Stabilization Efforts, Extend Credit Union Premium Period
February 4, 2009, Alexandria, Va. — The House Committee on Financial Services today approved HR 786, the Committee’s TARP reform legislation, and added two provisions NCUA Chairman Michael Fryzel recommended as imperative to the credit union system – increasing NCUA Treasury borrowing authority and providing for a 5-year restoration period to replenish the National Credit Union Share Insurance Fund (NCUSIF).
“I strongly believe that NCUA authority to borrow from Treasury should be increased to a level in keeping with the growth of the industry since 1971, when the current $100 million level was established,” Chairman Fryzel said yesterday in letter to House Committee Chairman Barney Frank. “Equity in the National Credit Union Share Insurance Fund (NCUSIF) has increased 270 fold since that time.”
In addition, Chairman Fryzel recommended the Federal Credit Union Act be amended to provide up to a 5-year restoration period to replenish the NCUSIF and restore the required NCUSIF equity ratio, consistent with the Federal Deposit Insurance Act.
“Such an extension would lessen the impact of premium charges on credit unions during difficult economic periods,” the Chairman said.
The House Committee included both provisions in the adopted legislation. The amendment on extension of the premium was proposed by Pennsylvania Congressman Paul Kanjorski, the amendment on the borrowing authority increase was proposed by Illinois Congressman Luis Gutierrez.
Chairman Fryzel also requested expanded authority to use the NCUSIF to address systemic risk under extreme circumstances when Federal Credit Union Act Section 208 authority proves inadequate, which was not addressed.
The legislation now moves on to the full House of Representatives for approval.
The National Credit Union Administration is the independent federal agency that regulates charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of nearly 89 million account holders in all federal credit unions and the majority of state-chartered credit unions.
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