National Credit Union Administration

This article is part of a series on
Banking in the United States of America
Federal Reserve System Monetary policy Regulation
Lending Credit card
Deposit accounts Checking Money-market Savings Certificate of deposit Account insurance Federal Deposit Insurance Corporation (FDIC) National Credit Union Share Insurance Fund (NCUA)
Payment & Transfer Check clearing Check 21 Act Electronic funds transfer (EFT) ATM card Debit card Wire transfer Substitute check Automated Clearing House (ACH) Bill payment
Banking charters Credit union Federal savings bank Federal savings association National bank State bank
United States portal

The National Credit Union Administration (NCUA) is the independent federal agency created by the United States Congress to regulate, charter, and supervise federal credit unions. With the backing of the full faith and credit of the U.S. government, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of nearly 105 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. As of September 2016, there were 5,844 federally insured credit unions, with assets totaling more than $1.3 trillion, and net loans of $847.1 billion.^[4]

Organization

The NCUA is governed by a three-member board appointed by the President of the United States and confirmed by the Senate. The President also chooses who will serve as Chairman.^[5] Board members serve six-year terms, although members often remain until their successors are confirmed and sworn in.^[5]

The NCUA is administered through five regional offices, each responsible for specific states and territories.^[2]

History

As part of the New Deal, President Franklin D. Roosevelt signed the Federal Credit Union Act into law in 1934. The law allowed the chartering of federal credit unions in all states. The federal law sought to make credit available and promote thrift through a national system of nonprofit, cooperative credit.

At first, the newly created Bureau of Federal Credit Unions was housed at the Farm Credit Administration. Regulatory responsibility shifted over the years as the bureau migrated from the Federal Deposit Insurance Corporation to the Federal Security Agency, then to the Department of Health, Education, and Welfare.

In the 1940s and 1950s, credit unions grew steadily, reaching a membership of more than six million people at over 10,000 federal credit unions by 1960.

1970s

The growth in credit unions resulted in an overhauling of the Bureau of Federal Credit Unions to form the modern independent federal agency that presently regulates the industry.

In 1970, the renaming to National Credit Union Administration was made possible in part by the creation of the National Credit Union Share Insurance Fund (NCUSIF) to insure credit union deposits. The NCUSIF was created without any tax dollars, capitalized solely by credit unions.^[6]

By 1977, services available to credit union members expanded, including share certificates and mortgage lending. In 1979, a three-member Board replaced the NCUA administrator. Congress added the finishing touches to this new administration with the addition of the Central Liquidity Facility, the lender of last resort for all credit unions.

The decade of the 1970s saw substantial growth for existing credit unions, with membership doubling and assets tripling to over $65 billion.

1980s and 1990s

The high interest rates and unemployment in the early 1980s brought insurance losses. The NCUSIF experienced strain, and credit unions lobbied Congress to recapitalize the Fund. In 1985, the plan became law, and federally insured credit unions recapitalized the NCUSIF by depositing 1 percent of their shares into the NCUSIF. The fully capitalized National Credit Union Share Insurance Fund has "fail safe" features. In 1991, when equity level dipped below 1.23 percent, the Board charged credit unions a premium to insure deposits. The enhancement of member services in the 1980s accompanied deregulation and increased flexibility in merger and field of membership criteria. Previously, membership in credit unions was generally limited to select groups with a pre-existing common bond, often employees of a particular company or trade. Changes since 1998 as a result of H.R. 1151, the Credit Union Membership Access Act, opened up membership eligibility to include much larger, loosely defined groups.^[7]

During the 1990s and into the 21st century, credit unions grew steadily in assets, shares, and members. Failures remained generally low, and the Share Insurance Fund maintained a healthy equity level.

2000 and beyond

During the 1990s and into the beginning of the 21st century, U.S. credit unions continued to develop as a whole. The NCUSIF also continued to thrive due to very few credit union failures. In 2008 and 2009 the global financial crisis exerted a strain on all institutions in the financial services sector – including credit unions. As a result, the Board charged NCUSIF premiums in 2009 and 2010.

Ultimately, five of the largest wholesale corporate credit unions (Constitution Corporate, Members of United Corporate, Western Corporate, Southwest Corporate, and U.S. Central Corporate) in the United States were rendered insolvent after investing in troubled mortgage-backed securities that became overwhelmed with unprecedented declines in value.

In response to the growing corporate credit union crisis, NCUA took the following actions:

• NCUA collaborated with the U.S. Treasury Department and Congress to establish the Temporary Corporate Credit Union Stabilization Fund (Stabilization Fund) to stabilize the U.S. credit unions, protect the NCUSIF and ensured credit unions, not taxpayers, paid the costs of the Stabilization Fund over time.
• NCUA re-securitized the unsuccessful mortgage backed securities after liquidating the five failed corporate credit unions. With a government-backed guarantee, the securities were sold in the market place to raise nearly $30 billion.
• A temporary share guarantee was established by NCUA for deposits at corporate credit unions.
• Bridge corporate credit unions were established by NCUA to ensure services continued to be provided to consumer credit unions during the transition and resolution timeframe.
• Bridge corporate credit union members and NCUA worked together to ensure a seamless transition of services to new entities.

In addition to the corporate credit union crisis, NCUA dealt with the failure of a number of consumer-owned credit unions weakened as a result of spikes in home foreclosures, business failures, and unemployment.

To protect against the failure of more credit unions, NCUA implemented a 12-month examination cycle for federally insured credit unions to detect problems in individual credit unions before they became insurmountable. NCUA also stepped up administrative actions wherever necessary to ensure prompt compliance. By year-end 2009, more than 96 percent of credit unions met the statutory definition of "well capitalized."^[8]

Regulatory modernization

After five years focused on strengthening the regulatory framework to withstand another crisis, NCUA shifted focus in 2015 toward regulatory relief. During the year, NCUA finalized or proposed 15 modernized regulations to reduce compliance burdens or authorize new powers. Touching key stakeholder concerns, these initiatives removed outdated procedures and non-statutory requirements. They also gave credit unions greater flexibility to make decisions and serve their members’ needs.^[9]

Insurance coverage

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

The National Credit Union Share Insurance Fund (NCUSIF) is the federal fund created by the United States Congress in 1970 to insure members' deposits in federally insured credit unions. On July 22, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law and included permanently establishing NCUA's standard maximum share insurance amount at $250,000. NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of nearly 105 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions.^[10]

Credit unions may also offer an array of additional financial services which are not covered by federal insurance.

Mycreditunion.gov

On March 9, 2011, Board Chairman Debbie Matz unveiled MyCreditUnion.gov, a source of educational information and personal finance tips designed to help individuals make financial decisions. The website also explains how credit unions work, where to find one, and even how to start a credit union.^[11]

The following year, NCUA launched a microsite, Pocket Cents, in order to promote financial literacy. The microsite offers access to tools and information designed to teach positive financial habits.^[12]

See also

• Title 12 of the Code of Federal Regulations
• Credit Union National Association
• NCUA Corporate Stabilization Program
• NCUA v. First National Bank & Trust

References

External links

• Official website
• NCUA in the Federal Register
• Search for NCUA Individual Credit Union Data
• NCUA Share Insurance Calculator
• MyCreditUnion.Gov
• Pocketcents