The NCUA's dividend for federal credit unions is a welcome development, but it should be larger, NAFCU officials said Tuesday.
"We are pleased that credit unions will be receiving their dividend from the merger of the funds but will continue to push for more monies to be returned to credit unions," Carrie Hunt, NAFCU's executive vice president of government affairs and general counsel, said.
NCUA officials announced Tuesday that next week, the agency will pay the promised dividends for more than 5,700 institutions eligible for the $735.7 million Share Insurance Fund distribution.
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The dividend is possible because the agency earlier this year decided to merge the Share Insurance Fund with the corporate stabilization fund. The agency also had said that it would raise its Normal Operating Level from 1.3% to 1.39%.
NAFCU had advocated keeping the operating level at 1.3% and said that if the agency did that, the fund distribution would be larger.
The trade group said that the current operating level stands at 1.46%.
CUNA officials said they were pleased with the distribution.
"We commend the NCUA Board for making the decision to start issuing refunds and see this as a victory for credit unions," CUNA President/CEO Jim Nussle said. "CUNA was the only national trade association advocating for refunds to begin in 2018, and more than 90% of credit unions who commented on NCUA's proposal supported our position. Credit unions look forward to getting their money back and putting it to work for their members."
CUNA officials said they support a temporary increase in the normal operating level to 1.39% while the share insurance fund holds corporate legacy assets. They said that the increase should be temporary and should be phased down to 1.3% by 2021, as the exposure of the legacy assets decreases.
NCUA officials have said that they will regularly review the normal operating level. In addition, earlier this year, the NCUA's Inspector General said that the decision to set the normal operating level at 1.39% was "reasonable."
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