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Without question, one of the most significant congressional actions affecting America’s credit unions was the 1% capitalization plan enacted by Congress back in July 1984 which helped make the National Credit Union Share Insurance Fund (NCUSIF) one of the strongest federal deposit insurance funds in America today. Like its counterpart the FDIC, the NCUSIF helps re-enforce the confidence of hard-working Americans that their deposits are safe. The American economy is stronger and more solid because of these effective and well-capitalized insurance funds. While the NCUSIF is indeed a success story, it is a success story written by the deposits of credit unions themselves, backed up by the federal government even though not a single taxpayer dollar has even been called upon to cover losses, and providing a bulwark of confidence upon which over 77 million Americans have entrusted their hard-earned dollars. Even though the first NCUA Insurance Fund was initially established by Congress back in 1970, unstable financial markets over the next decade or so dictated the need for a new and more secure approach to deposit insurance by the mid-1980s. When President Reagan signed into law the authorization which created the NCUSIF and established the 1% capitalization requirement, credit unions were afforded an opportunity to obtain strengthened and more viable federal deposit insurance. The NCUSIF, secured by the full faith and credit of the United States Government, was established as a revolving fund in the United States Treasury and specified by Congress to be managed by the National Credit Union Administration, an independent federal financial regulatory agency. In this 1984 action, credit unions not only took the lead in seeking passage of the 1% capitalization legislation, they were also among the first to step forward and state their willingness to put their own dollars on deposit to ensure that the modernization of their insurance structure became a reality. Many believe that this action transformed members of federally-insured credit unions from the least well-protected depositors in America at that point in history to among the best protected today. As this remarkable period of growth in credit union membership has now sustained itself for almost twenty years, I believe credit unions and their members can look back on that era of commitment as the historical marker when they became better able to have well-deserved confidence in the long-term viability of their movement in America. This confidence laid the foundation for today’s growth, and the stellar financial performance of the National Credit Union Share Insurance Fund since 1984 re-enforces this confidence each year, as does the financial stability of America’s credit unions as they grow and prosper. With each shareholder account insured up to $100,000, members of federally-insured credit unions are able to have full confidence that their deposits are safe and sound. Currently, there are 10,316 federally-insured credit unions whose one percent deposit in the NCUSIF gives them a vested, cooperative interest in the long-term strength and viability of the Fund, as well as the entire credit union system itself. Their growth as institutions is largely dependent upon their reputation for safety and soundness among those members. The success of the 1% capitalization law for the NCUSIF gives credit unions a crucial foundation upon which their reputation among their members can be built. It also makes the insurance fund an even more stable and secure fund for both the credit unions and their member depositors. The NCUSIF has maintained strong financial viability due to the low percentage of credit union failures and the addition of retained earnings to accommodate future growth of insured shares. The number of failures or financially troubled credit unions is at an all-time low. In addition, last year, federally-insured credit union assets and shares increased to $438 billion and $379 billion respectively, while capital remained strong with net worth at 11.4 percent. Because credit unions continue to have such an impressive and solid financial record of performance, this year the Fund returned a $99.5 million dividend to the nation’s federally-insured credit unions. This dividend represents the sixth straight year that the NCUSIF has returned an annual dividend to credit unions. At NCUA, we receive calls from time to time from members inquiring of the specifics and amount of coverage for their credit union deposits. We are always pleased to have the opportunity to answer these questions. When a member deposits his hard-earned savings in the credit union, he wants to be able to count on its safety and soundness. The NCUSIF helps provide this financial security and confidence. It is incumbent upon both NCUA and the nation’s insured credit unions to continue their strong financial performance and to also continue to inform their members of the strong financial condition of the National Credit Union Share Insurance Fund. It is a story worth telling. In fact, I believe the National Credit Union Share Insurance Fund is one of the great credit union success stories of the last twenty years. It is an example of the government and the credit union movement putting their best resources together for the security and betterment of the lives and savings of literally millions of Americans who, as of this date, have never seen a single penny of his or her tax dollars required to be used to cover their losses. Long may it be so.

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