Trades Urge Changes To Prepayment Plan
CUNA wants the NCUA to pay interest on credit unions' prepayment of assessments for the corporate credit union rescue while NAFCU wants the agency to have no maximum contribution.
Those are the recommendations the trade associations made in comment letters they sent the agency on Monday.
CUNA President/CEO Bill Cheney wrote that the plan is a "sound and creative approach" but needs modification to address concerns of credit unions.
Paying interest would offset lost opportunity costs, he wrote.
He recommended that the agency raise the minimium raised for the program to start from $300 million to $1 billion. Cheney said the higher level would cause a 13 basis point reduction compared with a 4 basis point at $300 million. This would lessen the negative effects of free riders by bringing participation to one-third of all credit unions.
NAFCU President/CEO Fred Becker wrote that eliminating the maximum anount of each credit union's contribution because each credit union "is more than capable of assessing its own liquidity position." Under the proposal the maximum a credit union could prepay would be 36 basis points.
He also recommended that the agency not add a line on Call Reports to indicate the amount a credit union has prepaid. He said decisions about participation should be confidential.