ALEXANDRIA, Va. – Federally insured credit unions have two newproposed rules to consider and a new corporate assessment to pay as a result of actions at the NCUABoard meeting on Tuesday.

The board approved two new proposed rules – one that wouldrequire credit unions with more than $10 million in assets todevelop a plan to address emergency liquidity shortfalls and set up their own backupliquidity source, and another that would allow the NCUA to declarestate regulated, federal insured credit unions in “troubledcondition.”

Credit unions with less than $100 million in assets would onlyhave to comply with the liquidity plan provision of the proposedliquidity rule. The additional requirement to establish backupliquidity sources comes as a result of the wind down of U.S.Central FCU, which provided most credit unions with access to theCentral Liquidity Facility.

Credit unions must establish their own CFL membership, accessthe CLF through an agent or establish borrowing access through theFederal Reserve Bank's Discount Window.

A second proposed rule would allow the NCUA to declare afederally insured, state-chartered credit union in “troubledcondition.” Currently, only state regulators can make such adeclaration for the credit unions they regulate.

The NCUA said in its Board Action Memorandum that the expandedauthority would “enhance NCUA's ability to identify a credit unionin 'troubled condition' and better protect the Share Insurance Fundfrom losses.”

Staff Attorney Steven Widerman told the board that the need forthe proposed rule comes from an “upswing in the number offinancially distressed credit unions in the $250 million to $500million asset range.” The troubled credit union rule would apply toboth natural person credit unions and corporates.

The board also approved the 2012 Temporary Corporate CreditUnion Stabilization Fund assessment of 9.5 basis points of insuredshares. The assessment will pay off the guarantees on twomedium-term NCUA Guaranteed Notes that re-securitized corporatelegacy assets; those notes mature in October and November 2012 andwill require approximately $3.5 billion in payments to investors.In addition to the $790.5 million 2012 assessment, the TCCUSF willhave to borrow $1.87 billion from the Treasury.

Director of Examination and Insurance Larry Fazio said the twonotes are the last of the medium term notes issued from legacyassets. As such, the cash flow for legacy assets will peak in 2012,and future assessments will be used to pay off Treasury borrowingsand any losses that exceed estimates on remaining NGNs. After theNGNs mature this fall, the TCCUSF will owe the U.S. Treasury $5.1billion.

Additional actions included the reauthorization of the 18%interest rate loan ceiling through March 2014, the approval of thequarterly insurance fund report, and the approval of a $2 millionreduction in the NCUA's operating budget for 2012 and a boardbriefing regarding an interagency proposal regarding mortgageappraisals.