RANCHO CUCAMONGA, Calif. – Arguing that members of federally insured credit unions should have the same grace period in deposit coverage that customers of federally insured banks have when two banks merge and the merger results in them having deposits of more than $100,000 in the combined financial, the California Credit Union has asked NCUA for parity for federally insured CUs under the same circumstances. “Currently, credit union members do not have a grace period of NCUSIF coverage if they have insured shares in two or more credit unions should they complete a merger,” CCUL’s letter to NCUA read. “On the effective date of the merger, should any member have more than $100,000 in shares in the now-combined credit union, the amount over $100,000 becomes immediately uninsured.” CCUL also asked the agency to adopt regulations that would extend NCUSIF coverage for six months following the death of a CU member. “At the time of a family member’s death, the funds on deposit at a federally insured credit union should not be the first consideration because of a reduction of federal share deposit insurance coverage. The six-month time frame will allow the family to thoughtfully consider its options for the deposited funds, and at the same time should not have a material impact on the NCUSIF,” the letter stated. Both protections are guaranteed to customers of banks insured by FDIC. According to FDIC regulations, when two or more federally insured banks merge, a customer who ends up with more than $100,000 in the combined institution generally retains full FDIC coverage for six months after the merger. The regulations are slightly different for time deposits.
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