National Credit Union Share Insurance Fund


National Credit Union Share Insurance Fund
Banking in the United States

Monetary policy
The Federal Reserve System

Regulation

Lending
Credit card

Deposit accounts
Savings account
Checking account
Money market account
Certificate of deposit

Deposit account insurance
FDIC and NCUA

Electronic funds transfer (EFT)
ATM card
Debit card
ACH
Bill payment
EBT
Wire transfer

Check Clearing System
Checks
Substitute checksCheck 21 Act

Types of bank charter
Credit union
Federal savings bank
Federal savings association
National bank

v · National Credit Union Administration (NCUA) for the purpose of providing deposit insurance to protect deposits of credit union members at insured institutions in the United States. It was created in 1970 shortly after the creation of the NCUA as an independent regulator of credit unions. The NCUSIF is funded completely by participating credit unions, and no taxpayer dollars have ever been used to bail out a credit union. The NCUSIF is backed by the full faith and credit of the United States government.

As of 31 December, 2007 the fund had a balance of $7.3 billion and insured nearly 87 million accounts at 5,036 federal credit unions and 3,065 state-chartered credit unions.[1]

Contents

Funding, premiums and dividends

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

In 1970 Congress approved and President Richard M. Nixon signed Public Law 91-206 (see 12 U.S.C. §§ 17811790(c)), 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.[2]

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.[3]

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.[1] Proceeds from the fund provided 53.3% of the NCUA operating budget in FY 2007 with the remainder coming from operating fees charged to regulated credit unions.[1]

In the event that the equity ratio of the fund falls below 1.2%, the NCUA will charge a premium to insured credit unions to maintain the required minimum. In years when the fund achieves a ratio above 1.3%, it will pay out excess funds to insured credit unions in the form of a dividend.[4] Since the fund was recapitalized by credit unions in 1985, the fund has charged one premium in 1992.[5] The fund has issued several dividends to member credit unions, the most recent in 2007.[3]

NCUSIF insured accounts

Since the passage of the Federal Deposit Insurance Reform Act of 2005 deposits were insured for up to $100,000 per insured account, or $250,000 for certain retirement accounts.[6] The passage of the Emergency Economic Stabilization Act of 2008 increased the amount of covered shares to $250,000 until the end of 2013.[7] This increase was made permanent by the Dodd–Frank Wall Street Reform and Consumer Protection Act in July of 2010.[8]

NCUA insurance covers "member share accounts and deposits":

  • Share draft accounts (aka "checking accounts").
  • Share savings that can be added to or withdrawn from at any time.
  • "Money market share" accounts, essentially high-interest share savings accounts (the name is similar to "money market funds" which are not insured).
  • Share certificates (CDs), which generally require funds be kept in the account for a set period.
  • Outstanding Cashier's Checks, Interest Checks, and other negotiable instruments drawn on the accounts of the credit union.

Accounts at different credit unions are insured separately. All branches of a credit union are considered to comprise a single credit union. NCUA publishes a guide entitled Your Insured Funds setting forth the general contours of NCUSIF insurance, and addressing common questions asked by credit union members regarding insurance.

References

Further reading


Wikimedia Foundation. 2010.

Look at other dictionaries:

  • National Credit Union Share Insurance Fund — (NCUSIF) A federal fund backed by the full faith and credit of the U.S. government that provides deposit insurance for credit unions in much the same way as the FDIC provides insurance for banks. Category: Personal Finance & Retirement Nolo’s… …   Law dictionary

  • National Credit Union Administration — Official seal Agency overview Formed March 10, 1970 Preceding agency …   Wikipedia

  • National Credit Union Administration — (NCUA) A federal agency that charters and supervises federal credit unions. The NCUA insures savings in federal and most state chartered credit unions across the country through the National Credit Union Share Insurance Fund (NCUSIF). Category:… …   Law dictionary

  • National Credit Union Administration - NCUA — An agency of the United States federal government that was created to monitor federal credit unions across the country. One of its major responsibilities is running the National Credit Union Share Insurance Fund (NCUSIF), which uses tax dollars… …   Investment dictionary

  • Credit union — Financial market participants Collective invest …   Wikipedia

  • American Share Insurance — (ASI) is a privately held deposit guaranty corporation that insures shares (deposits) in some state chartered credit unions. ASI was established in 1974 as the National Guaranty Insurance Fund , changing its name to American Share Insurance in… …   Wikipedia

  • One Nevada Credit Union — Type Credit union Industry Financial services Founded 1950 Headquarters L …   Wikipedia

  • Denali Alaskan Federal Credit Union — Type Credit union Industry Financial services Founded 1948 …   Wikipedia

  • Delta Community Credit Union — Type Credit union Industry Financial services Founded 1940 Headquarters Atlanta, Georgia United States Area served …   Wikipedia

  • Citizens Equity First Credit Union — Type Credit union Industry Financial services Founded 1937 …   Wikipedia


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.