On-Site Coverage: NCUA Board Approves 13.4 Basis Point Assessment
Alexandria, Va. -- The NCUA Board approved a 13.4 basis point assessment for
federally insured credit unions to help the Corporate Stabilization Fund repay the Treasury Department.
The assessment is expected to raise $1 billion, which will go toward the $1.5 billion that the fund will pay to the Treasury Department by Dec. 30. The remaining $500 million will come from a reduction in the liquidity assistance provided to the corporate system, NCUA Deputy Executive Director Larry Fazio told the board.
The premium, which will be billed in mid-July and due in mid-August, is needed because of the problems that corporate and natural person credit unions have faced in the past year.
The stabilization fund has $6.4 billion set aside for current estimates of losses that would be incurred by the fund over the life of the securities, and must repay the Treasury Department $690 million in outstanding borrowings. Congress gave the NCUA a $6 billion line of credit last year but the agency has only used $1 billion to date.
In September, the NCUA is scheduled to announce what assessment credit unions will have to pay to shore up the NCUSIF. NCUA Board Member Michael Fryzel said that after the board approves the assessment for the insurance fund the final additional total will be between 15 and 40 basis points as the agency had originally estimated. He recommended that credit unions budget toward the higher end of that range.