Dear Board of Directors:
President George W. Bush signed into law the “Emergency Economic Stabilization Act of 2008” on October 3, 2008, which temporarily increases federal deposit insurance coverage. The new law amends the share insurance coverage provided by the National Credit Union Administration (NCUA) through the National Credit Union Share Insurance Fund (NCUSIF) and the deposit insurance provided by the Federal Deposit Insurance Corporation (FDIC). The NCUA Board also took action on October 3 to eliminate the concept of “qualified beneficiary” in determining NCUSIF share insurance coverage.
The law increasing insurance coverage became effective on October 3, 2008, and will remain in place through December 31, 2009. Credit unions should note this time limitation in their communications with members. The new law provides the following:
- An increase in the minimum NCUSIF coverage from $100,000 to $250,000 on member share accounts. This includes all account types, such as regular share, share draft, money market, and certificates of deposit. Inpidual Retirement Account and Keogh account coverage remains unchanged at up to $250,000 separate from other types of accounts owned.
The increase in the minimum share insurance coverage to $250,000 will not result in an increase to your share insurance premium or operating fee. Changes will be made to the 5300 report for the December 2008 reporting cycle to address the change in coverage.
Basic NCUA Share Insurance Coverage Limits1
**The legislation authorizing the increase in share insurance coverage limits is effective October 3, 2008, through December 31, 2009.
Change in NCUA Rules – “Qualified Beneficiary”
To maintain parity with FDIC insurance coverage, the NCUA Board approved a change to Part 745.4 of the NCUA Rules and Regulations eliminating the concept of “qualified beneficiary”. Beneficiaries are now defined as natural persons as well as charitable organizations and other non-profit entities recognized as such under the Internal Revenue Code of 1986. For members with revocable trust accounts totaling no more than $1,250,000, coverage will be determined without regard to the proportional beneficial interest of each beneficiary in the trust.
Under the amended rules, a trust account owner with up to five different beneficiaries named in all of his or her revocable trust accounts at one NCUA-insured institution will be insured up to $250,000 per beneficiary. Revocable trust account owners with more than $1,250,000 and more than five different beneficiaries named in the trust(s) will be insured for the greater of either: $1,250,000 (5 X $250,000) or the aggregate amount of all the beneficiaries’ interests in the trust(s), limited to $250,000 per beneficiary.
Share Insurance Information, Brochures, Posters, and Decals:
NCUA has created the Share Insurance Tool Kit webpage that provides an updated version of the “Your Insured Funds” brochure as well as new posters and print ads reflecting the increase in insurance coverage to $250,000. In addition to versions that can be printed from the NCUA website, new brochures and NCUA decals will be available in 4 to 6 weeks and can be ordered using the information found online here.
I encourage you to share these changes with your members and to remind your members that not one penny of federally insured shares has ever been lost. America’s 89 million credit union members will greatly benefit from the above changes. NCUA looks forward to working with federally insured credit unions to implement these share insurance enhancements.
Should you have questions, please contact your district examiner, regional office, or state supervisory authority.
As a financial expert specializing in banking regulations and policies, I can provide comprehensive insights into the Emergency Economic Stabilization Act of 2008 and its implications on federal deposit insurance coverage for credit unions.
The Act, signed by President George W. Bush on October 3, 2008, brought significant changes to the National Credit Union Administration (NCUA) and the Federal Deposit Insurance Corporation (FDIC). It amended the share insurance coverage provided by the NCUA through the National Credit Union Share Insurance Fund (NCUSIF) and the deposit insurance provided by the FDIC. Specifically, it increased the minimum insurance coverage from $100,000 to $250,000 on member share accounts across various types, such as regular share, share draft, money market, and certificates of deposit.
The legislation also addressed the concept of "qualified beneficiary" in determining NCUSIF share insurance coverage, aligning it with FDIC insurance coverage. It redefined beneficiaries to include natural persons, charitable organizations, and other non-profit entities recognized under the Internal Revenue Code of 1986. The change streamlined coverage determination for revocable trust accounts, providing clarity on coverage limits based on the number of beneficiaries and the total trust value.
Furthermore, the Act ensured that this increase in insurance coverage to $250,000 did not lead to an increase in share insurance premiums or operating fees for credit unions. The NCUA implemented changes to reporting cycles and documentation to accommodate these alterations, maintaining consistency in reporting and compliance.
To disseminate information about the enhanced insurance coverage, the NCUA created a Share Insurance Tool Kit webpage offering updated brochures, posters, and print ads. Credit unions were encouraged to communicate these changes to their members, emphasizing the security of federally insured shares and the benefits accruing to America's credit union members.
These measures, effective from October 3, 2008, to December 31, 2009, aimed to provide stability and assurance to depositors amidst the economic challenges faced during that time, reassuring them about the safety of their funds within credit unions.
If there are further inquiries or if you require clarification on any aspect of these regulatory changes, I'm readily available to provide additional information or guidance.
