Compliance Blog

Written by Steve Van Beek

The December issue of the NCUA Report is now available.  This issue includes the following:

• Share Insurance and Stabilization Funds in Strong Positions
• Chairman's Corner: 2012 A Transformative Year for Credit Unions
• Board Actions: 2013 Budget Holds the Line on Staffing Levels
• Board Perspective (Board Member Fryzel): Time to Reassess
• Funds Available to Help Hardest Hit Members with Their Mortgages
• Office of Consumer Protection Report: Unlimited Share Insurance Coverage for Non-Interest Share Draft Accounts Ends Dec. 31, 2012
• Region IV Report: What Makes a Sound Member Business Lending Program?
• CFPB Delays New Mortgage Disclosures
• With Corporate Credit Unions System on Solid Footing, Share Guarantee Program Ends Dec. 31, 2012

If you are like me, the article on Unlimited Share Insurance Coverage Expiration jumped out at you.  The FDIC had issued guidance in early November to its institutions regarding the expiration of FDIC insurance.  It looks like NCUA is getting ready to provide information to credit unions.  Here is from the article:

"Beginning on January 1, 2013, NCUA will no longer insure noninterest-bearing transaction accounts separately from other accounts or in excess of the standard $250,000 share insurance amount. As the statutory expiration date nears, NCUA encourages federally insured credit unions to take reasonable steps to notify their members of this change in coverage and to help members restructure their accounts to maximize share insurance coverage. NCUA plans to post additional information on its website to help credit unions and their members navigate this transition."  (Emphasis added).

The good thing is that this gives credit unions quite a bit of flexibility (letters, statement notices, email, website notices, etc.) in how they notify affected members.  You'll probably want to review how many noninterest-bearing transaction accounts your credit union has - including how many are currently near or above the $250,000 level.  It would be a good idea to begin drafting language to inform those members of the change (you can build off the FDIC's model language).  You'd also want to prepare to take down any notices - such as in your branches and website - soon after January 1, 2013.  

A couple of other issues:

Watch Congress.  There is a bill that would extend this unlimited coverage for 2 more years.  Community banks are pushing hard for this extension - but it isn't looking likely.  If Congress does not act (i.e., does not pass an extension), the unlimited share insurance expires at midnight on December 31, 2012.     

Watch NCUA's Website.  The article in the NCUA Report indicated NCUA will be putting additional information - perhaps including model notices - on their website.  Keep an eye on this.  When we see it, we'll be sure to pass it along.