This new act signed into law last month by President Obama has two substantial meanings to credit unions and their members:
Credit Unions will maintain their own regulatory board and not be lumped in with the banks.

The .69% payout assessed in March will now be given back to each Credit Union, i.e.: The $200,000.00 plus that Electric Service Credit Union paid out in February will now be given back to ESCU on June 30, 2009

The first thing the act grants is the increased borrowing power by the NCUA. The NCUA can now borrow up to $5.9 billion instead of the $1 billion limit previously set by Congress. This will in turn fund the losses incurred by U.S. Central Credit Union and WesCorp Credit Union instead of making all natural person Credit Unions bear that burden.

By allowing the NCUA to borrow up to $5.9 billion from the Federal Government the act will make it easier for credit unions to assist in paying for U.S. Central and WesCorp Credit Union’s losses by allowing the repayment to be stretched out over a 7 year period. The way this is going to work now is that each Natural Person Credit Union will still be assessed a premium by the NCUSIF each September, but instead of it being 1% of their member shares (deposits) it will be 1.15% to 1.20% each September. An example of this is that last year a $25 million Credit Union with $20 million is shares (deposits) would have to have 1% of the $3M or $200,000 on deposit with the NCUSIF. Under the new plan the Credit Union would have to have $230,000.00 on deposit and would be assessed by the NCUSIF $30,000 more in September 2009.

Eventhough .15% is significantly less than the original .69% it is still going to be hard for some Credit Unions to come up with the required case and maintain the 7% capitalization requirement. Conversly, this will make it significantly easier for Credit Unions with moderate amounts of available cash reserves to survive as again, they will not have to take the .69% off their bottom line all at once.

Electric Service Credit Union is one of the fortunate ones, as we will get back our funds and because we have an almost 18% capitalization ratio, the minor amounts we will have to move to our NCUSIF account will only minimally impact our ratios.