NCUA Letter Advises CUs on Pending Insurance Changes
The National Credit Union Administration (NCUA) in a letter to credit unions (12-CU-14) discusses what these expirations may mean for credit unions and their members.
The TCCUSGP currently backs up the National Credit Union Share Insurance Fund's (NCUSIF) coverage of all shares--excluding paid-in-capital and membership capital accounts--at corporate credit unions. This insurance extends beyond the customary $250,000 share insurance level. Once the TCCUSGP expires on Jan. 1, NCUA coverage on deposits in corporate credit unions will be limited to the standard maximum share insurance amount of $250,000, the agency said.
Noting that the expiration of the TCCUSGP "marks the successful conclusion of this phase of the corporate system resolution program," the agency encouraged credit unions conducting business with corporate credit unions to evaluate their uninsured corporate account holdings and perform appropriate due diligence.
The agency also reminded credit unions that the pending expiration of insurance coverage on noninterest-bearing transaction accounts means that noninterest-bearing transaction accounts will be subject to the same insurance coverage levels as all other share accounts in a credit union, starting Jan. 1.
To prepare for this change, the NCUA encouraged credit unions to review their investments in federally insured deposits of other financial institutions in the event the investments are currently subject to unlimited coverage. Credit unions that have unlimited but expiring coverage deposits in other institutions should update their due diligence for credit risk implications, the NCUA said.
The agency also encouraged credit unions to:
Evaluate whether they hold member accounts with the temporary unlimited insurance coverage;
Communicate to membership the potential changes in insurance coverage occurring on Jan. 1;
Ensure that member account disclosures properly disclose the level of insurance coverage; and
Make members aware of the NCUA's Share Insurance Tool Kit on the agency's web site, ncua.gov.
For the full NCUA letter to credit unions, click here.