The Senate today passed a bill that includes provisions for a stabilization fund that would enable credit unions to spread out the cost of replenishing the NCUSIF over seven years. The vote was 91-5.
The fund, to be financed by a line of credit from the Treasury Department, would pay back the Treasury Department over seven years and natural person credit unions would pay the additional premium to the NCUSIF over that time period.
The NCUA has estimated that shoring up the corporates could cost credit unions an assessment of between eight and 20 basis points a year-with an average of 14–over seven years.
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The funds are necessary because of the costs incurred to stabilize the corporate credit unions, including injecting $1.1 billion in U.S. Central Corporate Credit Union, placing U.S. Central and Western Corporate Federal Credit Union into conservatorship, and guaranteeing the deposits of natural person credit unions in the corporates.
The Senate measure gives the NCUA $6 billion in borrowing authority (up from the current level of $100 million) and $30 billion in emergency borrowing authority. A conference committee will reconcile differences with the House version which did not give the agency any emergency borrowing authority.
The Senate bill gave the NCUA eight years to replenish the NCUSIF if its equity ratio falls below 1.2%. The House-passed version provides for five years.
The Senate measure also extends insurance coverage of accounts up to $250,000 through 2013. The House-passed bill made the extension permanent. Last year, Congress authorized a temporary increase through the end of 2009.
It's not known if the differences between the versions will be worked out in a conference committee or if the House will accept the Senate's version.
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