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ALEXANDRIA, Va.-The NCUA Board performed some housekeeping duties during a brief open meeting Oct. 23. NCUA CFO Dennis Winans presented the board with the quarterly insurance fund report. The agency’s net income is projected to be down to $40 million for 2003, according to NCUA data. This was far below the peak of $204.2 million in 2000 and the lowest level in the 10 years for which Winans presented data. “I think this shows us the realities of the market place today,” NCUA Chairman Dennis Dollar said. At the same time, operating expenses stayed below the budgeted $69.3 million at $61.9 million as of Sept. 30. The National Credit Union Share Insurance Fund equity ratio is projected to end the year at 1.25%, Winans said. The agency did not plan on insurance premiums for 2003 or even 2004, but if the current economic trend continues with double-digit share growth and low loan demand, assessments could be a consideration for 2005, he explained. However, Dollar stressed that it would be “inappropriate” to be projecting an assessment for 2005 because of the volatility of the market. He also pointed out that credit unions have never had double-digit share growth three years running and it may not happen this year, which will relieve some of the pressure on the ratio. The number of problem credit unions-those with 4 and 5 CAMEL scores-have held steady at 211, the same as all of last year, representing 0.78% ($3.7 billion) of all insured shares. Of those, 201 are code 4s and 10 are code 5s, Winans said. The cost of eight credit union failures so far in 2003 was $5.6 million. NCUA also issued a notice of proposed rulemaking and request for comment on guidance regarding establishing response programs in the event of unauthorized access to member information and member notice. The other Federal Financial Institutions Examination Council member regulators put a similar item out as a standard for banks and thrifts, but NCUA does not have the option of creating a standard. The purpose of the proposal is to protect consumers against the possibility of identity theft in this situation. Matthew Biliouris of NCUA’s Office of Examination and Insurance, explained that smaller credit unions could take advantage of their state leagues, trade associations, or consultants to help with the program as long as the credit union retains ultimate oversight. Additionally, the NCUA Board approved an Interpretive Ruling and Policy Statement concerning qualified financial contracts, which clarifies the agency’s treatment of QFCs and federal funds if NCUA must act as the liquidating agent or conservator of a credit union. The IRPS includes timing, form, authority, and maintenance of QFC documents. It is designed to protect the agency from fraudulent claims against failed credit unions while allowing credit unions equal treatment in QFCs, such as swap agreements, with other financial institutions. NCUA Vice Chair JoAnn Johnson stressed that the IRPS puts no additional burdens on credit unions, but simply outlines how the agency will handle QFCs in liquidation or conservatorship. Finally, the agency issued a direct final rule making three minor changes to its Freedom of Information Act rules, centralizing where to send requests, accommodating e-mail requests, and explaining that the cut off date for the information search is not the date of the request, but at the time the information is gathered. “I think it’s another effort at being user friendly,” NCUA Board Member Deborah Matz noted. – [email protected]

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