“I have seen no justification for an increase of this magnitude,” Don Johnson President & CEO of the Advantage Financial Federal Credit Union, in Washington, D.C., said in comments on the agency proposal.

However, board members said that such an increase may be needed for the agency to prudently manage the share insurance fund.

“Careful analysis shows that the assumption of some of the assets and liabilities of the Stabilization Fund will introduce additional volatility risk to the Share Insurance Fund's equity ratio above what could be safely managed if the normal operating level remains at its current level,” board Chairman J. Mark McWatters wrote in the latest issue of the agency's newsletter. “It is critical that the Share Insurance Fund maintain a sufficient amount of equity to cover potential changes in the value of the claims on the asset management estates of the failed corporates.”

McWatters also wrote that the agency's equity ratio has been decreasing in recent years and the agency expects that to continue because of strong growth in insured credit union shares and low yields on the share insurance fund's investments. Those investments are limited by federal law.

The agency would be required to impose a premium if the equity ratio dips below 1.2%. Increasing the equity ratio would assist the agency in withstanding a moderate economic downturn.

Still, many credit unions aren't buying that argument.

“We believe an NOL which would address a moderate recession would be most appropriate,” said Daniel Daigle, CEO of the Connecticut State Employees Credit Union in Hartford. “The NCUA does not need to maintain the NOL at an amount sufficient to address a severe recession.”

Daigle said that the level of reserves should not exceed 1.3%.

The NCUA is taking a prudent approach in considering an increase of the NOL to 1.39%, said Matt Stephenson executive vice president/COO of the Rogue Credit Union in Oregon

However, that increase should be temporary, he said, adding that once the assets are stabilized, the NOL should be returned to 1.30%.

The 1.39% is too high, said James Burns, CEO of the Jersey Shore Federal Credit Union in Northfield, N.J., who added that he does agree that the NOL should be increased to account for the legacy asset volatility as a result of the funds merger.

However, he said that the level should only be increased to 1.34%

But the NCUA has only charged a premium three times and only refunded money to credit unions twice, Chris Cardwell, CFO of the East Idaho Credit Union in Bonneville.

“Seems like the threshold is working quite well where it is,” he said.