Final rule on joint ownership accounts, NCUSIF report slated Feb. 18

A final rule on what records can be used to support the insured status of a joint ownership share account is slated for action during an open meeting to be held virtually next Thursday by the National Credit Union Administration (NCUA) Board.

The Feb. 18 open meeting, slated for 10 a.m. ET, will also include a quarterly report on the National Credit Union Share Insurance Fund (NCUSIF) and a briefing for the board on the Consolidated Appropriations Act, 2021, and the Emergency Capital Investment Program created under that statute.

The NCUA Board issued its proposal on joint ownership share accounts last May. Briefly, the proposed rule would allow account records information other than a signature card to support the insured status of a joint ownership share account in a credit union. The aim of the proposal – which mirrors a rule adopted in 2019 by the Federal Deposit Insurance Corp. (FDIC) Board – is aimed at facilitating prompt payment of share insurance in the event of a federally insured credit union’s failure “by explicitly providing alternative methods that the NCUA could use to determine the owners of joint accounts, consistent with the NCUA’s statutory authority,” the proposed rule summary stated.

The NCUSIF report slated next week is expected to show the fund’s equity ratio as of Dec. 31, 2020. Last September, the agency reported a 13-basis-points (bp) decline in the ratio to 1.22% during the six months ending June 30. That ratio was 16 bp lower than the fund’s “normal operating level” (target level) of 1.38% and within 2 bp of the level (1.2%) below which the agency would be required to deploy a restoration plan.

The drop in the ratio in the first half of last year was attributed to rapid share growth amid the COVID-19 pandemic. Agency staff said during the September open board meeting that the fund equity ratio was expected to rise to 1.32% by year-end 2020, following credit unions’ adjustments in their 1% NCUSIF capitalization deposit.

Next week’s report might bear out that projection, but one (unnamed) questioner during an NCUA webinar on Thursday pointed to ongoing share growth that was putting continued pressure on credit union net worth. And credit unions are slated to make another NCUSIF deposit adjustment in April (when federal credit unions will also be paying their 2021 operating fees to the agency).

Thursday’s webinar, held in large part to detail the priorities of NCUA Board Chairman Todd Harper, gave an overview of the agency’s supervisory focus, economic developments, and other matters (including the ECIP created by the Consolidated Appropriations Act, 2021).

NCUA Board Feb. 18 open meeting agenda

RR: NCUA urges ECIP-eligible credit unions to start working on applications now (Feb. 11, 2021)

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