If the NCUA doesn't merge its corporate stabilization fund with its share insurance fund, the agency could be forced to recapitalize the share insurance fund through assessments on credit unions, board member Rick Metsger warned Tuesday.
"Nobody wants an assessment," Metsger said at NAFCU's Congressional Caucus in Washington, D.C.
The NCUA has solicited comments on a plan to close the stabilization fund in September; that could result in a Share Insurance Fund distribution to federally insured credit unions of between $600 and $800 million. The stabilization fund had been scheduled to close in 2021.
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At the same time, the NCUA board agreed to seek comment on a plan to increase the normal operating level of the Share Insurance Fund from 1.30% to 1.39%.
Metsger said the operating level now stands at 1.25%, adding that he considers that level to be "half-empty." He added that "if something happens," the agency could "get to empty very, very quickly."
The funds may have to be merged to avoid getting to that empty level, he said.
Under federal law, the stabilization fund has been used to provide the agency with the ability to mitigate costs from stabilizing the corporate credit union system.
Metsger said the NCUA is reviewing comments filed in connection with the merger proposal.
He said that two recent developments could affect the share insurance fund—the recovery efforts in connection with Hurricanes Harvey and Irma and the dwindling values of taxicab medallions.
In its comment letter, NAFCU said it opposes the closing of the stabilization fund right now. The trade group said that additional research is needed before the merging of the stabilization and share insurance funds.
Metsger also said he remains concerned about data breaches in the financial industry, such as the Equifax crisis.
"It's amazing to me that we can protect our G-mail better than we can protect our financial lives," he said.
Metsger's term officially ended last month, but he can serve on the board until a replacement is confirmed. President Trump actually has two vacancies on the board—Metsger's and a replacement for Debbie Matz, who resigned from the board last year.
Only two members of the board can be members of the president's political party. Board Chairman J. Mark McWatters is a Republican.
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