Will Senate Bill 4036 alter Credit Union Assessments?

Posted: January 22, 2011 in Credit Unions, NCUA
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In the lame duck session of Congress before the end of 2010,   Senate Bill 4036 passed in both houses of Congress without much response from Credit Unions. It now sits on President Obama’s desk. The bill was sponsored by Senator Christopher Dodd D-CT.

Initially in 2009 when the Stabilization Fund was enacted, it allowed the cost at that time of $6 billion dollars to be spread out up to seven years. Now if President Obama signs Senate Bill 4036 into law, then in effect the NCUA could utilize the same kind of restructuring for natural person credit unions that was done with the corporates.

This new bill would enable the same kind of restructuring that was done in the corporate network for natural person credit unions.

What effect will this have on the Stabilization Fund and future assessments to Credit Unions? The big will get bigger and where will this leave the little Credit Union?

How many stars

Institutions with a four or five-star rating seem be financially sound according to Bauer Financial and their rating system.

  • In the latest quarter, 59.7 percent of the nation’s banks and 65.2 percent of federally insured credit unions received four or five stars.
  • Nationwide, 420 credit unions received two stars or below in Bauer Financial’s latest rankings, down from 449 in the second quarter and 443 in the first quarter.

Making the problem list does not signal that an institution is on the brink of failure. But customers may want to be sure their deposits don’t exceed the federal insurance limit of $250,000.

Loans outstanding to credit unions are at 2008 levels. While money is available to lend by credit unions, most see customers paying off debt and avoiding loans. The deleveraging process will continue, as consumers have paid off nearly $2 Trillion in debt over the past two years.

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