User:JimMillerJr/Sandbox/NCUSIF draft

From Wikipedia, the free encyclopedia

The National Credit Union Share Insurance Fund (NCUSIF) is administered by the National Credit Union Administration (NCUA) for the purpose of providing deposit insurance to protect deposits of credit union members at insured institutions in the Untied States. It was created in 1970 shortly after the creation of the NCUA as an independant regulator of credit unions.

Contents

[edit] History

In 1970 Congress approved and President Richard M. Nixon signed Public Law 91-206, creating the National Credit Union Administration as an independent agency. Soon after, Congress established the National Credit Union Share Insurance Fund and made the NCUA responsible for its administration.(see 12 U.S.C. § 17811790(c))

[edit] Funding, premiums and dividends

This sign, displayed at all insured credit unions, informs members that their savings are insured by the NCUA
This sign, displayed at all insured credit unions, informs members that their savings are insured by the NCUA

The NCUSIF is funded entirely by deposits from insured credit unions. All Federal credit unions, as well as any state chartered credit union insured by the fund, are required to maintain a balance equalling 1% of all covered deposits in the fund. The NCUA is required to set a target equity balance of at least 1.2% and no more than 1.5% of the total of insured deposits.[1]

The majority of the fund is invested in United States treasury securities, and a significant portion of the earnings are used to fund the operations of the NCUA. Proceeds from the fund provided 57% of the NCUA operating budget in FY 2006 with the remainder coming from operating fees charged to regulated credit unions.

In the event that the equity ratio of the fund fall below 1.2%, the NCUA will charge a premium to insured credit unions to maintain the required minimum. In years when the fund has acheived a ratio above 1.3%, it will pay out excess funds to insured credit unions in the form of a dividend.[2]Since the fund was recapitalized by credit unions in 1985, the fund has charged one premium in 1992. The fund has issued several dividends to member credit unions, the most recent in 2007.[1]

[edit] Coverage

Since the passage of the Federal Deposit Insurance Reform Act of 2005 deposits are insured for up to $100,000 per insured account, or $250,000 for certain retirement accounts.

Misc Notes:

25th Anniversary

President Clinton honored the insurance fund’s 25th Anniversary in a letter, saying, in part, “Providing fair loans, sound fiscal advice, and high quality consumer services to their members, credit unions have earned the trust of their shareholders and the respect of financial institutions throughout our nation.

“The creation of share insurance for credit unions has played a vital role in this success story, helping to guarantee continued stability in the industry and peace of mind for the millions of Americans who rely on these unique financial institutions every day,” the President wrote.


[edit] References

  1. ^ a b Cooke, Sarah. "NCUA Board to Reopen FOM Manual, NCUSIF Declares $52 Million Dividend", The Credit Union Times, Highline Media, 2007-03-21. Retrieved on 2008-06-06. 
  2. ^ Hampel, Bill. ""What Happened to NCUSIF Dividends?"", Credit Union Magazine, October 2002. 

[edit] Sources

Credit Union Failures and Insurance Fund Losses: 1971-2004, Federal Reserve Bank of San Francisco, 2005-08-19, <http://www.frbsf.org/publications/economics/letter/2005/el2005-20.html>