No Extension of Corporate Share Guarantee Into 2013: NCUA
Credit unions holding out hope the NCUA will extend the corporate share guarantee beyond Dec. 31 should start making other plans.
John Zimmerman, public affairs specialist for the agency, said the regulator is still planning to end the share guarantee at the end of this year.
“Ending the share guarantee program is a critical step toward a normal business operating environment for the corporates,” Zimmerman said Wednesday. “Each stage of the corporate system resolution process has come with challenges and we very much appreciate that fact.”
First Entertainment Credit Union President/CEO Chuck Bruen said he’s concerned corporates could experience big draw down of deposits due to the guarantee’s expiration, at a time when liquidity cycles are at a low point.
“How prepared are they to handle a big draw down?” he asked. The leader of the $962 million Hollywood, Calif., credit union said he’s transferred most of his corporate business to the Federal Reserve, but still keeps investment deposits at a couple of corporates.
Marnie Nemcoff, vice president of marketing at the $130 million Matadors Community Credit Union in Chatsworth, Calif., said her team isn’t worried about the guarantee expiration, but said the credit union is proactively looking into options.
“We’re not leaving Corporate America, but we are looking at what we can do to avoid having to lose our insurance coverage,” Nemcoff said.
In a letter to credit unions this past March, the NCUA said when the Share Guarantee expires on Jan. 1, 2013, NCUA coverage on deposits in corporate credit unions will be limited to the standard maximum share insurance amount of $250,000. The guarantee applied to overnight accounts and certificates.
“Before the Share Guarantee expires, you should determine whether to make any adjustments necessary to meet your credit union’s risk tolerance,” the letter advised.