House Passes Measure Allowing NCUA to Pay Into the Corporate Stabilization Fund
The NCUA will be able to make payments to the Temporary Corporate Credit Union Stabilization Fund without borrowing from the Treasury Department as a result of legislation passed by the House on Wednesday night.
Currently, the agency has to borrow the money from the Treasury Department to repay the fund and then assess credit unions. Under the new law, the agency could assess credit unions a premium first, without incurring borrowing costs.
The credit union must pay the premium within 60 days and the measure requires the agency to "take into consideration any potential impact on credit union earnings that such an assessment may have."
"Of particular note is the clarification of the application of an accounting standard that enables NCUA to provide capital assistance to a troubled credit union, thus encouraging merger with a healthy credit union," NCUA Chairman Debbie Matz stated. "This change minimizes losses to the NCUSIF and benefits consumers by preserving continued credit union service through merger instead of liquidation."
The House passed the measure by unanimous consent as the Senate did last week.
The bill would also allow credit unions that receive assistance from the NCUA under section 208 of the Federal Credit Union Act to be counted as net worth. The agency provides such assistance to facilitate a merger if it would reduce the loss to the NCUSIF.
It also clarifies that the definition of the NCUSIF's equity ratio is based on the fund's unconsolidated financial statements.
NCUA Chairman Debbie Matz requested those changes during her testimony before the Senate Banking Committee earlier this month.
The bill also instructs the Government Accountability Office to study the Cue's oversight of corporate credit unions and the effectiveness of how the agency implemented prompt corrective action is due within a year of the measure's enactment.
Within six months of receiving the report, the Financial Stability Oversight Council (of which Matz is a member) must submit a report to the House and Senate on actions taken and any recommendations issued to the NCUA.
It is the second piece of legislation exclusively delaying with credit unions passed during this session of Congress. Last year, in the wake of the corporate credit union crisis lawmakers passed legislation which created the TCCUSF.