CUNA Comment Letter

Share Insurance

May 22, 2006

Ms. Mary Rupp
Secretary of the Board
National Credit Union Administration
1775 Duke Street
Alexandria, VA 22314-3428

Dear Ms. Rupp:

The Credit Union National Association (CUNA) appreciates the opportunity to comment on the interim final rule to amend the share insurance rules, which will incorporate recent amendments to the Federal Credit Union Act (FCUA). These amendments, among others, include raising the share insurance limit for certain retirement accounts from $100,000 to $250,000, as well as outline the procedures in which the $100,000 limit for other accounts may be adjusted for inflation, beginning in 2010. CUNA represents approximately 90 percent of our nation’s 8,900 state and federal credit unions, which serve nearly 87 million members.

Summary of CUNA’s Comments

We generally support NCUA’s proposal to provide pass-through insurance coverage to each participant of an employee benefit plan, as long as the credit union is either well capitalized or adequately capitalized under the prompt corrective action requirements. With regard to the pass- through coverage, NCUA has requested comment as to whether certain restrictions should still apply, which may include requiring the plan trustee or employer sponsoring the plan to be a member or requiring a certain percentage of participants to be members, such as 25%.

We agree that pass-through coverage for employee benefit plans is appropriate as it would be inequitable for only certain participants of a retirement plan to have their funds fully insured, while others may have significant funds at risk if the credit union were to become insolvent. Share insurance coverage is of vital importance to protect these funds and further the goal of ensuring that participants can finance an adequate standard of living when they retire.

We also understand the necessity for membership restrictions, such as requiring the plan trustee or employer sponsoring the plan to be a member. Another possibility to consider would be to extend pass-through coverage to nonmembers, provided such plan participants are eligible for membership.

Thank you for the opportunity to comment on the interim final rule to amend the share insurance rules. If you or other Board staff have questions about our comments, please give Senior Vice President and Deputy General Counsel Mary Dunn or me a call at (202) 638-5777.

Sincerely,
Jeffrey Bloch
Senior Assistant General Counsel