Operations

NCUA to Allow Voluntary Prepayments of Stabilization Fund Assessments

Revised program could reduce 2011 assessments by 6.4 basis points of insured shares.

June 29, 2011
/ PRINT / ShareShare / Text Size +

The NCUA Board adopted a plan to permit voluntary prepayments of $500 million in Corporate Stabilization Fund assessments.

The program has the potential to decrease the currently projected 2011 stabilization fund assessment by 6.4 basis points (bp), from 24.9 to 18.5 bp of insured shares.

NCUA says it designed this program with these principles in mind:

  • Setting assessments in a counter-cyclical manner relative to credit union performance and providing resolution to the corporate crisis during this economic cycle;
  • Maintaining a meaningful contingency in Treasury borrowing capacity; and
  • Using credit union prepayments to reduce near-term stabilization fund assessments.

NCUA made several changes to its original voluntary stabilization fund prepayment plan. The agency:

  • Committed to using all received prepayments to decrease 2011 assessments dollar-for-dollar;
  • Increased the program’s size from $300 million to $500 million;
  • Increased the maximum amount a credit union may voluntarily prepay to 48 bp of insured shares as of March 31; and
  • Adopted a more inclusive minimum participation standard of $1,000 or at least 5 bp of insured shares as of March 31. This allows 98% of credit unions to participate in the program.

Elements remaining from the original proposal:

  • Participation will be voluntary and open to all federally insured credit unions able to meet the minimum participation amount;
  • Liquidity will be provided to the stabilization fund through an advance of assessments from participating credit unions; and
  • Credit unions must commit to raising $500 million for the agency to implement the voluntary prepaid assessment program.

Participating credit unions will not accrue interest on prepaid assessments.

NCUA will apply the program amounts as offsets against stabilization fund assessments for the years 2013 and thereafter, subject to any remaining balance. Voluntarily prepaying future assessments will not change the ultimate cost of the Corporate System Resolution.

Program information and instructions regarding participation are available here. Participating credit unions must download and return the participation form by July 29.

On Aug. 9, NCUA will tally the participation level to see if credit unions commit to $500 million. If not, the program won’t be executed and the regular scheduled assessment would be billed.

If credit union commitments exceeded the program amount, participating institutions will be debited a prorated amount of their commitment on Aug. 18, and a reduced assessment would follow.

Post a comment to this story

heroes

What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive