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December 29, 2008

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7/26/2012 04:00 PM

There is no way that this increased share insurance is only going to be temporary. I'd bet on a premium increase.

Marvin Umholtz

7/26/2012 04:00 PM

Although the legislation said there would be no deposit insurance premium increases directly as a result of this higher limit, the current loss experiences at FDIC and NCUSIF may trigger increases anyway. On Tuesday, October 7, the FDIC more than doubled the premium for a low risk bank. Pundits are also already placing bets on whether the “temporary” $250,000 deposit insurance coverage level will remain temporary. It is difficult to believe that consumers’ and small business owners’ confidence will be so radically improved one year from now that the coverage can be rolled back without negative reaction. Credit unions would be smart to include an additional NCUSIF capitalization in their 2009 – 2010 budgets.

Jeff Hendrickson

7/26/2012 03:57 PM

Chip - It was my understanding that because the coverage is temporary, NCUA can neither require the 1% "capitalization" nor can they charge us a premium based on the higher reserve. What I do think this means is that we will have to do more reporting so NCUA knows where the $100k and $250k coverage points are at. If NCUA makes larger pay-outs of failed credit unions at the $250k level, that's where I see we may be at greater risk of being charged a premium. I have confirmed this from a few sources - I would hope that to be the case, since the increased coverage is temporary.

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