Legal Definitions - National Credit Union Administration

The National Credit Union Administration (NCUA) is an independent agency of the U.S. federal government responsible for regulating and insuring federal credit unions across the country. Its primary role is to ensure the safety and soundness of the credit union system, protecting the deposits of millions of members.

The NCUA achieves this by:

• Chartering new federal credit unions, giving them official authorization to operate.
• Insuring member deposits through the National Credit Union Share Insurance Fund (NCUSIF), similar to how the FDIC insures bank deposits. This means your money is protected up to certain limits if a credit union fails.
• Supervising and examining credit unions to ensure they are financially stable, comply with laws, and operate responsibly.
• Providing emergency financial support to credit unions through the Central Liquidity Facility when needed.
• Administering programs like the Community Development Revolving Loan Fund to support credit unions serving underserved communities.

Here are some examples of how the NCUA's work impacts individuals and the financial system:

• Example 1: Protecting Your Savings

  Imagine a family has diligently saved $75,000 in their local credit union for a down payment on a house. If, due to unforeseen economic circumstances, that credit union were to experience severe financial difficulties and become insolvent, the family wouldn't lose their hard-earned money. The National Credit Union Administration, through the National Credit Union Share Insurance Fund, would step in to ensure their deposits are returned, up to the insured limits, providing peace of mind and financial security.

• Example 2: Launching a New Community Credit Union

  A group of community leaders in a rural area identifies a need for more accessible financial services for their residents. They decide to establish a new federal credit union focused on local small businesses and agricultural loans. Before they can open their doors, they must apply to the National Credit Union Administration. The NCUA will review their business plan, financial projections, and proposed governance structure, and if all requirements are met, it will issue a federal charter, officially authorizing the new credit union to operate and serve its community.

• Example 3: Ensuring Financial Stability and Compliance

  A large federal credit union has been growing rapidly, but internal audits suggest some of its lending practices might be becoming overly aggressive, potentially putting the institution at risk. The National Credit Union Administration conducts regular examinations of all federal credit unions. During one such examination, NCUA officials identify these risky practices. They would then work with the credit union's management to implement corrective actions, such as revising lending policies or increasing reserves, to ensure the credit union remains financially sound and continues to protect its members' assets.