National Credit Union Administration
Encyclopedia
The National Credit Union Administration (NCUA) is the United States
independent
federal agency that supervises and charters federal credit union
s. NCUA also insures savings
in federal and most state-chartered credit unions across the country through the National Credit Union Share Insurance Fund
(NCUSIF), a federal fund backed by the full faith and credit of the United States government.
As of March 2011, there were 7,292 federally insured credit unions with over 90 million members, total assets of $939.28 billion, and net loans of $550.8 billion.
and confirmed by the United States Senate
. The President also chooses which member will serve in the position of Chairman. Board members serve six year terms, although members often remain until their successors are confirmed and sworn in.
The NCUA is administered through five regional offices, each responsible for specific states and territories.
by President Franklin D. Roosevelt
in 1934 as part of the New Deal
. The federal law sought to make credit available and promote thrift through a national system of nonprofit, cooperative credit unions.
At first the newly created Bureau of Federal Credit Unions
was housed at the Farm Credit Administration
. Responsibility of regulation would shift over the years as the agency migrated from the Federal Deposit Insurance Corporation
to the Federal Security Agency
, then to the Department of Health, Education, and Welfare.
In the 1940s and 1950s credit unions grew steadily - reaching a membership of more than six million people by 1960 - at over 10,000 federal credit unions.
to form the modern independent federal agency that regulates under the present day title.
In 1970, the renaming to National Credit Union Administration was made possible by the creation of the National Credit Union Share Insurance Fund
(NCUSIF) to insure credit union deposits. The NCUSIF was created without any tax dollars, capitalized solely by credit unions.
By 1977, services available to credit union members expanded, including share certificates and mortgage lending
. In 1979, a three-member Board replaced the NCUA administrator. Congress added the finishing touches to this new administration by the addition of the Central Liquidity Facility
, the lender of last resort
for chartered credit unions.
The decade of the 1970s saw substantial growth for credit unions, with membership doubling and assets tripling to over $65 billion.
s and unemployment
in the early 1980s brought insurance losses; the enhancement of member services in the 1980s accompanied deregulation and increased flexibility in merger and field of membership criteria. Previously, membership in credit unions was generally limited to select groups with a pre-existing common bond, often employees of a particular company or trade. Membership eligibility was opened up to include much larger, loosely defined groups, such as all residents of a geographical area. The National Credit Union Share Insurance Fund
experienced strain, and credit union
s lobbied for Congressional oversight to recapitalize the Fund.
In 1985 the plan was enacted, and federally insured credit unions recapitalized the NCUSIF by depositing 1 percent of their shares into the Share Insurance Fund. The fully capitalized National Credit Union Share Insurance Fund has "fail safe" features. Only once in 1991, when equity level dipped below 1.23 percent, has the Board charged credit unions a premium to insure deposits.
During the previous decade and into the 21st century, credit unions are steadily growing. Failures remain low, and the Share Insurance Fund maintains a healthy equity level.
. On March 20, 2009, during the financial crisis of 2007–2010, the NCUA took over the two largest corporate credit union
s with combined assets of $57 billion because of the losses on their investments in mortgage-backed securities
.
Most properly established share accounts in federally insured credit unions are insured up to the Standard Maximum Share Insurance Amount (SMSIA), which has been $100,000 since the passage of the Depository Institutions Deregulation and Monetary Control Act
in 1980. The Emergency Economic Stabilization Act passed in October 2008 to address the subprime mortgage crisis
increased the insurance coverage on regular share accounts to $250,000 until the end of 2013. In September 2010, the NCUA announced that the $250,000 coverage would be permanent. Certain retirement accounts, such as Individual Retirement Account
s and Keogh Plans, are insured separately, and had their coverage raised to $250,000 under the Federal Deposit Insurance Reform Act
of 2005. Generally, if a credit union member has more than one account in the same credit union, those accounts are added together and insured in the aggregate.
Credit unions may also offer an array of additional financial services
which are not covered by federal insurance.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
independent
Independent agencies of the United States government
Independent agencies of the United States federal government are those agencies that exist outside of the federal executive departments...
federal agency that supervises and charters federal credit union
Credit union
A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members...
s. NCUA also insures savings
Deposit insurance
Explicit deposit insurance is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due...
in federal and most state-chartered credit unions across the country through the National Credit Union Share Insurance Fund
National Credit Union Share Insurance Fund
The National Credit Union Share Insurance Fund is administered by the National Credit Union Administration 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...
(NCUSIF), a federal fund backed by the full faith and credit of the United States government.
As of March 2011, there were 7,292 federally insured credit unions with over 90 million members, total assets of $939.28 billion, and net loans of $550.8 billion.
Organization
The NCUA is governed by a three member board appointed by the President of the United StatesPresident of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
and confirmed by the United States Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
. The President also chooses which member will serve in the position of Chairman. Board members serve six year terms, although members often remain until their successors are confirmed and sworn in.
The NCUA is administered through five regional offices, each responsible for specific states and territories.
| Region | Headquarters | States |
|---|---|---|
| Region I | Albany, NY Albany, New York Albany is the capital city of the U.S. state of New York, the seat of Albany County, and the central city of New York's Capital District. Roughly north of New York City, Albany sits on the west bank of the Hudson River, about south of its confluence with the Mohawk River... |
Connecticut, Massachusetts, Maine, Michigan, New Hampshire, Nevada, New York, Rhode Island, and Vermont |
| Region II | Alexandria, VA Alexandria, Virginia Alexandria is an independent city in the Commonwealth of Virginia. As of 2009, the city had a total population of 139,966. Located along the Western bank of the Potomac River, Alexandria is approximately six miles south of downtown Washington, D.C.Like the rest of northern Virginia, as well as... |
California, District of Columbia, Delaware, Maryland, New Jersey, Pennsylvania, Virginia, and West Virginia |
| Region III | Atlanta, GA Atlanta, Georgia Atlanta is the capital and most populous city in the U.S. state of Georgia. According to the 2010 census, Atlanta's population is 420,003. Atlanta is the cultural and economic center of the Atlanta metropolitan area, which is home to 5,268,860 people and is the ninth largest metropolitan area in... |
Alabama, Florida, Georgia, Indiana, Kentucky, Mississippi, North Carolina, Ohio, Puerto Rico,South Carolina, Tennessee, and Virgin Islands |
| Region IV | Austin, TX Austin, Texas Austin is the capital city of the U.S. state of :Texas and the seat of Travis County. Located in Central Texas on the eastern edge of the American Southwest, it is the fourth-largest city in Texas and the 14th most populous city in the United States. It was the third-fastest-growing large city in... |
Arkansas, Iowa, Illinois, Kansas, Louisiana, Minnesota, Missouri, North Dakota, Nebraska, Oklahoma, South Dakota, Texas and Wisconsin |
| Region V | Tempe, AZ Tempe, Arizona Tempe is a city in Maricopa County, Arizona, USA, with the Census Bureau reporting a 2010 population of 161,719. The city is named after the Vale of Tempe in Greece. Tempe is located in the East Valley section of metropolitan Phoenix; it is bordered by Phoenix and Guadalupe on the west, Scottsdale... |
Alaska, Arizona, Colorado, Guam, Hawaii, Idaho, Montana, New Mexico, Oregon, Utah, Washington, and Wyoming |
History
The chartering of credit unions in all states is owed to the signing of the Federal Credit Union ActFederal Credit Union Act
The Federal Credit Union Act is an Act of Congress enacted in 1934. The purpose of the law was to make credit available and promote thrift through a national system of nonprofit, cooperative credit unions...
by President Franklin D. Roosevelt
Franklin D. Roosevelt
Franklin Delano Roosevelt , also known by his initials, FDR, was the 32nd President of the United States and a central figure in world events during the mid-20th century, leading the United States during a time of worldwide economic crisis and world war...
in 1934 as part of the New Deal
New Deal
The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They were passed by the U.S. Congress during the first term of President Franklin D. Roosevelt. The programs were Roosevelt's responses to the Great Depression, and focused on what historians call...
. The federal law sought to make credit available and promote thrift through a national system of nonprofit, cooperative credit unions.
At first the newly created Bureau of Federal Credit Unions
Bureau of Federal Credit Unions
The Bureau of Federal Credit Unions was a federal agency in the United States that supervised and chartered federal credit unions from 1934 until 1970. The Bureau was created through the Federal Credit Union Act as part of the New Deal. It was self-financing and did not receive appropriations from...
was housed at the Farm Credit Administration
Farm Credit Administration
The Farm Credit Administration is an independent agency of the Executive Branch of the United States Government. It regulates and examines the banks, associations, and related entities of the Farm Credit System, a network of borrower-owned financial institutions that provide credit to farmers,...
. Responsibility of regulation would shift over the years as the agency migrated from the Federal Deposit Insurance Corporation
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...
to the Federal Security Agency
Federal Security Agency
The Federal Security Agency was an independent agency of the United States government established in 1939 pursuant to the "Reorganization Act of 1939"...
, then to the Department of Health, Education, and Welfare.
In the 1940s and 1950s credit unions grew steadily - reaching a membership of more than six million people by 1960 - at over 10,000 federal credit unions.
1970s
The great growth resulted in an overhauling of the Bureau of Federal Credit UnionsBureau of Federal Credit Unions
The Bureau of Federal Credit Unions was a federal agency in the United States that supervised and chartered federal credit unions from 1934 until 1970. The Bureau was created through the Federal Credit Union Act as part of the New Deal. It was self-financing and did not receive appropriations from...
to form the modern independent federal agency that regulates under the present day title.
In 1970, the renaming to National Credit Union Administration was made possible by the creation of the National Credit Union Share Insurance Fund
National Credit Union Share Insurance Fund
The National Credit Union Share Insurance Fund is administered by the National Credit Union Administration 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...
(NCUSIF) to insure credit union deposits. The NCUSIF was created without any tax dollars, capitalized solely by credit unions.
By 1977, services available to credit union members expanded, including share certificates and mortgage lending
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
. In 1979, a three-member Board replaced the NCUA administrator. Congress added the finishing touches to this new administration by the addition of the Central Liquidity Facility
Central liquidity facility
The Central Liquidity Facility is a mixed ownership United States government corporation created to improve the general financial stability of credit unions by serving as a liquidity lender to credit unions experiencing unusual or unexpected liquidity shortfalls. Member credit unions own the CLF...
, the lender of last resort
Lender of last resort
A lender of last resort is an institution willing to extend credit when no one else will. The term refers especially to a reserve financial institution, most often the central bank of a country, intended to avoid bankruptcy of banks or other institutions deemed systemically important or 'too big to...
for chartered credit unions.
The decade of the 1970s saw substantial growth for credit unions, with membership doubling and assets tripling to over $65 billion.
1980s on
The high interest rateInterest rate
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...
s and unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
in the early 1980s brought insurance losses; the enhancement of member services in the 1980s accompanied deregulation and increased flexibility in merger and field of membership criteria. Previously, membership in credit unions was generally limited to select groups with a pre-existing common bond, often employees of a particular company or trade. Membership eligibility was opened up to include much larger, loosely defined groups, such as all residents of a geographical area. The National Credit Union Share Insurance Fund
National Credit Union Share Insurance Fund
The National Credit Union Share Insurance Fund is administered by the National Credit Union Administration 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...
experienced strain, and credit union
Credit union
A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members...
s lobbied for Congressional oversight to recapitalize the Fund.
In 1985 the plan was enacted, and federally insured credit unions recapitalized the NCUSIF by depositing 1 percent of their shares into the Share Insurance Fund. The fully capitalized National Credit Union Share Insurance Fund has "fail safe" features. Only once in 1991, when equity level dipped below 1.23 percent, has the Board charged credit unions a premium to insure deposits.
During the previous decade and into the 21st century, credit unions are steadily growing. Failures remain low, and the Share Insurance Fund maintains a healthy equity level.
Financial crisis
As the insurer and regulator of Federally chartered credit unions, the NCUA oversees credit union safety and soundness, much like the FDIC. It is sometimes required to place credit unions in conservatorshipConservatorship
Conservatorship is a legal concept in the United States of America, where an entity or organization is subjected to the legal control of an external entity or organization, known as a conservator. Conservatorship is established either by court order or via a statutory or regulatory authority...
. On March 20, 2009, during the financial crisis of 2007–2010, the NCUA took over the two largest corporate credit union
Corporate Credit Union
A corporate credit union, also known as a central credit union, provides services to natural person credit unions. In the credit union industry, they are sometimes referred to as "the credit union’s credit union"...
s with combined assets of $57 billion because of the losses on their investments in mortgage-backed securities
Mortgage-backed security
A mortgage-backed security is an asset-backed security that represents a claim on the cash flows from mortgage loans through a process known as securitization.-Securitization:...
.
Insurance coverage
Depository Institutions Deregulation and Monetary Control Act
The Depository Institutions Deregulation and Monetary Control Act, a United States federal financial statute law passed in 1980, gave the Federal Reserve greater control over non-member banks.* It forced all banks to abide by the Fed's rules....
in 1980. The Emergency Economic Stabilization Act passed in October 2008 to address the subprime mortgage crisis
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....
increased the insurance coverage on regular share accounts to $250,000 until the end of 2013. In September 2010, the NCUA announced that the $250,000 coverage would be permanent. Certain retirement accounts, such as Individual Retirement Account
Individual Retirement Account
An individual retirement arrangement is the blanket term for a form of retirement plan that provides tax advantages for retirement savings in the United States...
s and Keogh Plans, are insured separately, and had their coverage raised to $250,000 under the Federal Deposit Insurance Reform Act
Federal Deposit Insurance Reform Act
The Federal Deposit Insurance Reform Act of 2005 , is an act of the United States Congress that regulates banks...
of 2005. Generally, if a credit union member has more than one account in the same credit union, those accounts are added together and insured in the aggregate.
Credit unions may also offer an array of additional financial services
Financial services
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...
which are not covered by federal insurance.
Mycreditunion.gov
On March 9, 2011, Board Chairman Debbie Matz unveiled MyCreditUnion.gov, a one-stop toolbox of educational information and personal finance tips designed to help individuals in making smart financial decisions and better choices for their money. The website also explains how credit unions work, where to find a credit union to join, and even how to start a credit union.See also
- Central Liquidity FacilityCentral liquidity facilityThe Central Liquidity Facility is a mixed ownership United States government corporation created to improve the general financial stability of credit unions by serving as a liquidity lender to credit unions experiencing unusual or unexpected liquidity shortfalls. Member credit unions own the CLF...
- Credit unionCredit unionA credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members...
- Credit Union National AssociationCredit Union National AssociationThe Credit Union National Association, commonly known as CUNA , is a national trade association for both state- and federally-chartered credit unions located in the United States. CUNA provides member credit unions with trade association services, such as lobbying, professional development, and...
- Federal Deposit Insurance CorporationFederal Deposit Insurance CorporationThe Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...
- NCUA Corporate Stabilization ProgramNCUA Corporate Stabilization ProgramThe NCUA Corporate Stabilization Program was created on January 28, 2009, in response to investment losses incurred at U.S. Central Credit Union, which is the Corporate Credit Unions' corporate credit union....
- NCUA v. First National Bank & TrustNCUA v. First National Bank & TrustNCUA v. First National Bank & Trust, , is a legal case in which the Supreme Court of the United States ruled that banks had prudential standing to challenge regulations that permitted credit unions to enroll unaffilated members.-Background:...