The time has come to close the NCUA's Temporary Corporate Credit Union Stabilization Fund, return the money to credit unions and get the NCUA's normal operating level down to 1.3%. The corporate crisis is over. The purpose of the stabilization fund no longer exists. It's time for the credit union system to move forward.
Some have suggested that the NCUA continue to manage the stabilization fund assets and study its options further. This, frankly, does not make any sense. Credit unions have nothing to gain through a delay. They will not receive more money if the stabilization fund is held until maturity, as the NCUA will continue the hold fund assets after it merges the stabilization fund with the National Credit Union Share Insurance Fund.
So, the question boils down to whether the NCUA or credit unions would be better stewards of these funds. CUNA believes in credit unions and their ability to make better use of these resources than the NCUA. Seriously, the notion that these funds should sit in an NCUA account and not be put to work for the good of 110 million credit union members is ridiculous.
Credit unions understand this. As the representative of the vast majority of federal and state chartered credit unions, CUNA has had a terrific opportunity to listen to their interests and concerns, and we heard loud and clear that credit unions want to put corporate assessment funds to work for their members as soon as possible.
That is why CUNA urged the NCUA to merge the stabilization fund with the NCUSIF immediately so credit unions can receive a distribution in 2018 and a distribution in following years as assets mature and the NCUA returns the normal operating level of the NCUSIF to 1.3%.
Of course, CUNA would prefer a repayment scheme that would return all corporate assessments and corporate capital to credit unions directly, but there will never be enough assets to achieve this end, and the Federal Credit Union Act determines how the funds will be paid back to credit unions.
The Act clearly says the only thing the NCUA can do with excess stabilization funds is merge it with the NCUSIF. And no, the NCUA cannot and should not abuse the "Chevron Doctrine," to pay credit unions directly from the stabilization fund. Doing so would unnecessarily expose the agency to litigation that will ultimately cost credit unions money. The Chevron Doctrine gives agencies deference in the eyes of the court but it does not allow agencies to contravene the law.
The real concern with the NCUA's proposal is what the NCUSIF's normal operating level should be after the funds are merged. We believe the agency should follow the plain meaning of the statute, and return the normal operating level to 1.3%. But even if the NCUA were temporarily to set the normal operating level at 1.34% or even 1.39%, it would not, as some have suggested, represent a theft of credit unions' assets because the agency cannot just make the money disappear and the funds still would be available to benefit credit unions in a severe economic downturn. Nevertheless, we will continue to work with the NCUA toward the goal of returning the NOL to its historic and congressionally-intended level of 1.3%.
The NCUA board, under the leadership of Chairman J. Mark McWatters, has been open and transparent though the process of closing the stabilization fund. Chairman McWatters and Board Member Metsger should be commended for putting this proposal out for comment when they were not required to do so by law.
Because the process has been transparent and the merger of the funds does not disadvantage credit unions, we urge the NCUA to merge the funds immediately and give credit unions a repayment in 2018. And, we will continue to work with the agency to return more funds in upcoming years.
Finally, for those advocating the NCUA hold onto credit union funds? We're just not sure what they're thinking.
Jim Nussle is President/CEO for CUNA. He can be reached at 202-638-5777 or [email protected].
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