Tuesday, June 21, 2011 11:56:00 AM
On Monday, the New Jersey Credit Union League filed a comment letter in response to the NCUA Board's proposal regarding a voluntary prepaid corporate credit union assessments program. At credit union industry urging, the NCUA Board has proposed to create a voluntary prepaid assessment program plan in an effort to improve the liquidity of the Corporate Stabilization Fund and provide enhanced flexibility in setting future Stabilization Fund assessments.
The League's comment letter urges NCUA to consider the inadvertent "burden to small-sized credit unions" to reach the minimum level of participation. NCUA must also pay consideration to the "exclusion" some small credit unions will experience that do not meet the 2.8 million in assets threshold to participate in the program.
In part, due to the "voluntary" nature of the program, because prepayments benefit "all" credit unions regardless of participation level, the League believes that the "free-rider" issue may dissuade some credit unions from participating.
The League recommends that NCUA take more time to explore other alternatives to reduce the Stabilization Fund deficit, provide transparent communications, as well as consider offering additional incentives to credit unions that "voluntarily" participate in the program.
For more information on NCUA's plan and to read the League's comment letter, click here.