With little media coverage, the National Credit Union Administration Board (NCUA), on March 20th, placed U.S. Central Federal Credit Union, Lenexa, Kansas, and Western Corporate (WesCorp) Federal Credit Union, San Dimas, California, with combined assets of $57 billion into conservatorship. (NCUA Media Release of March 20, 2009)
In 1934 President Roosevelt signed the Federal Credit Union Act into law authorizing federally chartered credit unions in all states. In 1970, the NCUA was formed as an independent agency and the National Credit Union Share Insurance Fund, (NCUSIF) was "created without tax dollars and capitalized solely by credit unions". Today, the NCUA serves 82 million depositors with $520 billion in assets, and $355 billion in loans in more than 9,500 federally insured credit unions. (About NCUA, March 21, 2009)
The NCUA, (at least on their website), makes great effort to leave the visitor with the impression that 1) the NCUSIF has never received any taxpayer funding and that 2) "the NCUSIF, like FDIC, is backed by the "full faith and credit" of the U.S. Government" (NCUA Fact Sheet September, 2008)
The NCUA Fact Sheet however, paints a different picture. It reports that on September 30, 2008 the NCUA served 7,904 credit unions with assets of over $801.7 billion in assets. It goes further to document that:
The NCUSIF equity ratio is 1.27% based on June 30, 2008, estimated insured shares of $601.6 billion.
The NCUA also manages a government corporation, owned by the credit unions (howzatagain?) called the "Central Lending Facility" to "contribute to the financial stability of the credit union industry during periods of economic volatility". Congress sets the borrowing limit annually, but due to the financial "crisis", Congress temporarily removed the limit, thus a statutory limit of $41.5 billion is now in place.
The NCUA also manages the Community Development Revolving Loan Fund (CDRLF) established by Congress in 1979:
"to enable low-income credit unions to (1) provide financial services to their communities; (2) stimulate economic activities in their communities, resulting in increased income, ownership, and employment; and (3) operate more efficiently.The CDRLF makes loans and technical assistance grants to low-income credit unions."
"As of October 31, 2008, with earned interest and additional appropriations, the CDRLF has grown to $16.4 million and provides 93 low-income credit unions outstanding loans totaling more than$11.8 million."
Hmm. Sounds familiar.
And last, the NCUA has its own "Access Across America" initiative:
"which focuses on creating economic empowerment for communities and Americans across the nation, the agency empowers credit unions to provide access to affordable financial services to the underserved and "unbanked," so members may achieve the American Dream of homeownership, owning a small business, or realizing financial self-sufficiency with financial education."
Hmm. Sounds familiar.
Depending upon the numbers used, NCUA has just placed 10% of covered assets into conservatorship. It's backed by the full "faith and credit" of the United States government. It has been instructed to serve the undeserving and Congress has opened the purse-strings. It sounds like taxpayer money to me. Maybe we should call it Fannie Mae Lite.
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Angier is self-employed in agri-business and can be contacted at chuckangier@gmail.com
©2009 Chuck Angier, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Saturday, March 21, 2009
Last modified: Saturday, March 21, 2009
The views expressed in this article are those of Chuck Angier only and do not represent the views of Nolan Chart, LLC or its affiliates. Chuck Angier is solely responsible for the contents of this article and is not an employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.
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