The plan adopted today would allow credit unions, if they choose to do so, to prepay some their Corporate Stabilization Fund assessment. The agency has set the target size of the program at $500 million, which will result in a reduction of the 2011 regular assessment from 24.9 basis points (bp) to 18.5 bp.
If less than $500 million is committed, the NCUA will not implement the program. If more than $500 million is committed, prepayments from credit unions will be prorated so that the $500 million target will not be exceeded. The Credit Union National Association (CUNA) urged the agency to allow up to $1 billion in prepaid assessments.
Credit unions may commit a maximum of 48 basis points of their total insured shares as of March 31, 2011 to the fund. The agency previously proposed a maximum payment of 36 basis points.
NCUA Chairman Debbie Matz during the meeting emphasized that participation in the prepayment plan is voluntary, and said that the agency is neither encouraging nor discouraging credit union participation in the program. "We are offering it as an option," she said.
Agency staff said that credit unions that do elect to participate in the plan would not be publicized. The amount that they have decided to pay into the prepayment fund would also not be publicized. However, that information will be made available on NCUA call reports once they are released later in the year.
The NCUA proposed the prepayment plan at its May open board meeting and accepted public comment on the proposal until June 20. The agency received a total of 184 comments on the proposal, with the majority of credit unions saying that they would participate in the plan.
The NCUA will be sending a letter to credit unions today regarding the program and participating credit unions must provide completed program agreements, which the agency is providing with the letter and on its website, by July 29.