House Panel Aids Insurance Fund

WASHINGTON — The NCUSIF received some breathing room and access to more money to deal with emergencies as a result of amendments approved by the House Financial Services Committee last Wednesday.Lawmakers approved an amendment by Rep. Paul Kanjorski (D-Pa.) giving the NCUSIF five years to restore itself to the proper equity ratio if it falls below the congressionally mandated level of between 1.2% and 1.5%. Currently this must be done within a year.Although the NCUA, CUNA and NAFCU all pushed for increasing the period to eight years, officials at the agency and trade associations said they are pleased by the increase.NCUA Director of Public and Congressional Affairs John J. McKechnie said the amendment will help credit unions maintain a positive return on assets by spreading out the replenishment of the fund so any premium increases might be able to be spread out.The panel also approved an amendment by Rep. Luis Gutierrez (D-Ill.) to increase the NCUSIF’s borrowing authority from $500 million to $6 billion. That amount hasn’t been raised since the fund came into existence in 1971.Lobbyists for CUNA and NAFCU said the amendments are “reasonable” even though credit unions didn’t get all that they wanted.CUNA Vice President for Legislative Affairs Ryan Donovan said they had hoped Congress would give the NCUA authority to take additional actions to address systemic risks within the credit union system.He said that issue could resurface within the next several weeks when the panel takes up legislation to give the Federal Reserve Board such powers and at that time the NCUA could be authorized to exercise those powers.NAFCU Director of Legislative Affairs Brad Thaler said the amendments will help shore up the share insurance fund at an especially difficult time for the economy in general.The amendments are part of a bill that would make permanent the federal insurance of all credit union and bank accounts up to $250,000. Last fall, when Congress passed the legislation that created the financial and housing rescue plan including the Troubled Asset Relief Program, lawmakers raised the amount that was covered through 2010.–[email protected]