Shouldn't be Required, But CUs Should Do it on Their Own

At America’s 9,600 federally insured credit unions, members are assured that their accounts are backed by the full faith and credit of the U.S. government. No credit union member has ever lost a penny on a federally insured account. If members are well advised, federal insurance coverage can extend far above $100,000 per family. For instance, a family of four could structure their accounts to obtain federal insurance up to $1.4 million in a single credit union. In the extraordinary event that a credit union is liquidated – whether small or large – the National Credit Union Share Insurance Fund has ample funds to cover all members’ accounts to the full extent of the federal law. However, even at healthy credit unions, members may be unaware when their accounts are over the insurance limit. For example, when two credit unions merge, members may be unaware that the combined total of their accounts in each credit union may put them over the limit. This is why at last month’s NCUA Board meeting, I asked our regulatory staff to consider this issue. Our staff will include it in a review of NCUA’s merger regulations this fall as part of our three-year review cycle. This month, NCUA’s Public and Congressional Affairs Office posted a share insurance “estimator” on our Web site: www.ncua.gov. This free online service enables members to determine their federal insurance coverage on each account. I hope all credit unions publicize this service and encourage members to take advantage of it. Members will benefit by learning that certain types of accounts (depending on ownership) count toward their insurance limit, while others do not. Members with multiple CDs and savings accounts, or several IRA rollovers, will be more aware of how their accumulated interest affects their limit. Credit unions are pro-consumer institutions. I do not favor adding unnecessary regulatory burdens. But I do encourage credit unions to be proactive – by helping members structure their accounts in a way that maximizes their federal insurance coverage, and by letting members know (if possible) when their accounts go over the limit. By taking these proactive steps, credit unions can empower members to manage their accounts more effectively. Debbie Matz Board Member NCUA