Compliance Blog

Written by Steve Van Beek

Update on TAG/NIBTA Unlimited Share Insurance.  It looks more and more like Congress will not extend the unlimited share insurance coverage for noninterest-bearing transaction accounts.  Earlier this afternoon, NCUA issued Letter to Credit Unions 12-CU-14 which included these steps for credit unions:

• Evaluate whether your credit union holds member accounts with the temporary unlimited insurance coverage.
• Communicate to your membership the potential changes in insurance coverage occurring on January 1, 2013.
• Ensure your account disclosures properly disclose the level of insurance coverage.
• Make your membership aware of NCUA's Share Insurance Tool Kit.

Be Ready to Remove Notices.  As we blogged on previously, you'll also need to make sure you remove any notices about the unlimited share insurance coverage soon after January 1, 2013.  These will most likely be in your branches and on your website.

A couple of natural questions:  

How do you communicate with your membership?  

I think there is a good argument that credit unions have flexibility in notifying membership (especially as the process is not spelled out in Dodd-Frank, the FDIC's guidance or NCUA's Letter).  The notification could be a combination of email messages, website notices, phone calls, letters, etc.  It is probably too late for statement messages.     

Does this mean every member?

Similarly, there is a good argument that credit unions make efforts to notify impacted members (or those likely to be impacted).  Do members who do not have a noninterest-bearing transaction account need to be notified?  What about members who have $5,000 in a noninterest-bearing transaction account?  Good questions and there haven't been clear answers in the guidance.  Ultimately, your notification process and which members you notify will be a business decision for your credit union.  One that you should be sure to document.  

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The letter also indicates that this expiration may impact your credit union's accounts at other institutions.

"We also encourage you to review your credit union’s investments in federally insured deposits of other financial institutions in the event they are currently subject to unlimited coverage.  If you have unlimited coverage deposits in other institutions that will be expiring, you should update your due diligence for credit risk implications."

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Temporary Corporate Credit Union Share Guarantee.  NCUA's Letter also reminds CUs of the expiration of the Temporary Corporate Credit Union Share Guarantee program.  NCUA had previously issued Letter to Credit Unions 12-CU-03 with that reminder.  For additional information on this, check out the 2nd half of our blog post from March.