NCUA Says Share Insurance Fund Performing Well, Issues Two Final Rules

The National Credit Union Administration delivered good news, drew hard lines and offered a bit of compromise at its October board meeting in Washington, D.C.

Fall is usually a busy time at the NCUA, as the agency wraps up items from its Spring Unified Agenda and submits Fall regulatory plans to the executive branch. Two more meetings are scheduled before the end of the year to complete that work.

In October, the NCUA gave credit unions good news when it confirmed that the Share Insurance Fund is performing well, eliminating the need to assess federally insured credit unions a Share Insurance Fund premium in 2013. For some credit unions, that meant the difference between operating in the red or the black.

The NCUA also issued two final rules, including the final emergency liquidity rule—a rule the Northwest Credit Union Association had actively worked to improve. The rule requires a credit union with less than $50 million in assets to maintain a basic written liquidity policy. Credit unions with assets between $50 million and $250 million will need to have a contingency funding plan, and credit unions with more than $250 million in assets will need to establish a relationship with the NCUA’s Central Liquidity Facility or the Federal Reserve Discount Window.

The NCUA’s original proposal had set lower asset thresholds—less than $10 million, $10 million-$100 million, and $100 million and above—for each requirement.

“The Association advocated for adjusting the tiers, and for a mid-2014 effective date,” says John Trull, NWCUA’s director of regulatory advocacy. “The NCUA listened and compromised, giving small- and mid-size credit unions less-burdensome regulatory requirements and the time they need to comply. However, they refused to let Federal Home Loan Banks be a source of emergency liquidity for purposes of the rule.”

For the financial institutions they serve, Federal Home Loan Banks have been the largest source of liquidity for mortgage lending for nearly eight decades. In a letter to the NCUA on Jan. 31, all 12 regional FHLB presidents advocated for inclusion as a source of emergency liquidity, and all agreed to work on a memorandum of understanding with the NCUA.

The NCUA also finalized a rule requiring all federally insured credit unions to submit call reports electronically, and proposed a rule that would require stress testing for credit unions with more than $10 billion in assets.

The draft rule is similar to a final rule issued by the Comptroller of the Currency that applies to 61 banks with assets between $10 billion and $50 billion. The NCUA says it expects that the four credit unions affected by the rule—Navy Federal, State Employees, Pentagon Federal and BECU—will have to dedicate approximately 750 hours to complying with the rule, compared to the 1,500 hours that the affected banks will need to comply with the Comptroller’s rule.

Trull says the Association expects the NCUA will tackle several major issues in its November and December meetings, including the final CUSO rule, the Incentive-Based Compensation Rule and significant changes to risk-weighted capital requirements for determining Prompt Corrective Action.


Questions? Contact Gary Stein: 503.350.2216,

Posted in Federal, NCUA.