Board Member Addresses NASCUS on Closure, Mergers Rule, Reorganization
SAN DIEGO, Ca. (Aug. 31, 2017) – National Credit Union Administration Board Member Rick Metsger today reminded credit unions of the Sept. 5 deadline for submitting comments on the proposed plan to close the Temporary Corporate Credit Union Stabilization Fund and make a Share Insurance distribution in 2018, saying the agency “will carefully weigh all points of view.”
“The agency has been working diligently to have everything in place to close the fund before the end of the federal fiscal year on Sept. 30,” Metsger said. “We must do that in order to complete a final audit before the end of the year, which we need to do to give credit unions a distribution in 2018. If we accomplish all that, it would eliminate the need to charge a Share Insurance Fund premium at this time.”
Metsger spoke today to the National Association of State Credit Union Supervisors at the organization’s annual summit in San Diego.
The NCUA Board approved a proposed plan to close the Stabilization Fund at its July open Board meeting. The proposed plan includes increasing the normal operating level of the Share Insurance Fund from the current 1.30 percent to 1.39 percent. The agency anticipates a distribution of between $600 million and $800 million to credit unions next year.
“I do note that one trade organization, NAFCU, has asked now that we delay closing the fund at this time,” Metsger said. “That, of course, would delay until at least 2019 any potential distribution to credit unions as well as put a premium back on the table to address the declining equity ratio in the Share Insurance Fund. There are still a few days left for credit unions to comment on closing the fund, and I encourage them to do so. I will be interested in whether they support the trade association’s position to not close the fund at this time. We will carefully weigh all points of view.”
In addition to the proposed Stabilization Fund closure, Metsger’s remarks covered several current issues, including the NCUA’s planned reorganization, cybersecurity threats, and the proposed agency rule requiring more information to credit union members when their credit union is contemplating a merger.
On the matter of the proposed mergers rule, Metsger said the agency is going over comments about the proposal, which would provide credit union members with greater transparency on how their equity is spent during the merger process, so they can make an informed decision.
“When shareholders of public companies vote on a merger, they know they will be paid for their shares, often at a premium price, in exchange for tendering their ownership,” he said. “That isn’t how it works in the cooperative model, so member-owners should know if any insiders are getting enriched by their merger proposal and defend that position with full disclosure. The mechanics of providing that disclosure are still up in the air, and we have received numerous suggestions on how to refine the rule.”
Metsger also noted the reorganization of the agency, announced last month, is well under way and will “allow NCUA to be more efficient as we adapt with a changing industry.”