CUNA Regulatory Comment Call

March 25, 2009

Proposed Rule: FCU Operating Fees


Please feel free to e-mail your responses to Senior Vice President and Deputy General Counsel Mary Dunn at and to Regulatory Research Counsel Luke Martone at You may also contact us at 800-356-9655, ext. 6743, if you have questions. Click here to access the proposed rule.


The FCU Act requires FCUs to pay an annual operating fee to the NCUA. The NCUA Board has discretion in establishing how the operating fee is determined; it is currently calculated by multiplying the FCU’s “total assets” by a certain percentage that is set by the NCUA. “Total assets” include “all assets created on an FCU’s books related to investments made by an FCU that are currently outstanding.” Thus, there is a direct correlation between the amount of an FCU’s investments and its operating fee.

In December of last year, the Credit Union System Investment Program (CU SIP) and Credit Union Homeowners Affordability Relief Program (CU HARP) were created to assist in stabilizing the corporate credit union system. Under CU SIP, credit unions borrow from the Central Liquidity Facility (CLF) and then invest those proceeds in a corporate credit union. Under CU HARP, credit unions—that will use the funds to modify at-risk mortgages—borrow from the CLF and then invest those proceeds in a two-year guaranteed CU HARP Note issued by a corporate credit union.

NCUA encourages credit unions to participate in both CU SIP and CU HARP. However, NCUA is concerned that since investments in both these programs result in increased operating fees, some credit unions will refrain from participating.


The proposed rule would exclude “any asset that is created on the books of a natural person federal credit union when it makes a CU SIP or CU HARP related investment in a corporate credit union” from “total assets” for purposes of calculating the operating fee. Aside from this exclusion, FCUs would continue to calculate their operating fee in the same manner as they currently do.

NCUA intends for this proposed rule to remove the disincentive for FCUs to participate in CU SIP and CU HARP related to the increase in the operating fee.

Since the operating fee is based on an FCU’s total assets as of the close of the previous fiscal year, the amendments made in this rule would not affect the calculation of the operating fee until 2010.


  1. Will the proposed rule have any negative or unintended consequences?

  2. Aside from an increase in the operating fee, are there any other changes that can be made to increase CU SIP and CU HARP participation?

  3. Any other concerns or questions regarding the proposed rule?

Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Deputy General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Luke Martone • Senior Regulatory Counsel • (202) 508-6743 •