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NCUA Board Member Rodney E. Hood Statement on Proposed Rule, Part 745, Simplification of Insurance Rule

October 2023
NCUA Board Member Rodney E. Hood Statement on Proposed Rule, Part 745, Simplification of Insurance Rule
Rodney E. Hood

NCUA Board Member Rodney E. Hood during a meeting of the NCUA Board.

As Prepared for Delivery on October 19, 2023

Under the Federal Credit Union Act, the NCUA is mandated to provide share insurance to members or anyone with funds legally held in a member account, should a federally insured credit union fail. This is up to the current standard maximum share insurance amount of $250,000. The Federal Credit Union Act dictates that the net share insurance amount will be determined based on the Board's regulations. It also states that all accounts a member has in the credit union, either under their name or others, will be combined to determine this amount. The Federal Credit Union Act permits the Board to clarify the scope of share insurance coverage for various account types, including those of minors, trusts, or joint tenancy.

Today’s proposed rule aligns the NCUA with FDIC updates concerning trusts. Share insurance is generally straightforward, but trust accounts introduce complexities. Factors like the nature of the trust, whether it's revocable or irrevocable, play a role. Given the FDIC took years to finalize its rule, feedback on this matter is keenly awaited from our stakeholders.

In that regard I do have some questions:

  • Over the past four years, how many queries related to trust accounts in specific to share insurance coverage have been received by the NCUA?
  • Can you provide examples of inquiries that highlight the intricacy of the current share insurance system concerning trust accounts?
  • If this rule is finalized, what's the strategy for informing the public about these changes?

I have no further remarks.

Rodney E. Hood Share Insurance Fund
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