National Credit Union Administration (NCUA)

An independent federal agency in the United States responsible for supervising credit unions

What is the National Credit Union Administration (NCUA)?

The National Credit Union Administration (NCUA) is an independent federal agency in the United States responsible for supervising credit unions. Specifically, the NCUA is tasked with insuring deposits at federal credit unions in the US, protecting members who own credit unions, and chartering credit unions.

 

National Credit Union Administration

 

The NCUA’s primary mission is to provide a safe credit union system that protects both credit unions and its consumers through regulation and supervision to promote confidence in cooperative credit.

Today, the federal agency currently monitors over 9,500 federally-insured credit unions that provide services to over 80 million customer accounts.

 

Summary

  • The National Credit Union Administration (NCUA) is a federal agency in the United States responsible for supervising credit unions.
  • The NCUA is tasked with insuring deposits at federal credit unions in the US, protecting members who own credit unions, and chartering credit unions.
  • Two main areas of responsibilities of the NCUA is administering the National Credit Union Share Insurance Fund (NCUSIF), which provides up to $250,000 of insurance in the event of credit union failure to millions of account holders, and acting as a regulator of the Federal Financial Institutions Examination Council (FFIEC).

 

What are Credit Unions?

Credit unions, similar to banks, provide a number of services, such as mortgages, loans, and savings accounts. What differentiates credit unions is that they are non-profit organizations that operate as a financial cooperative. The main purpose of credit unions is to serve its members rather than earning a profit as banks do, since banks are responsible to their shareholders.

Members of credit unions pool their money together in order to provide services to each other. Any income generated is used to fund products and provide services that benefit its community of members as a whole.

Credit unions typically provide fewer services than traditional banks, but its members often benefit from better rates on savings, lower interest rates on loans, and reduced fees.

 

History and Structure of the NCUA

Federal credit unions themselves were first created in 1934 at the height of the Great Depression under former US President Franklin D. Roosevelt’s New Deal. The Federal Credit Union Act enabled the chartering of federal credit unions in all states.

The purpose of the law was to make credit available to American citizens and promote the system of cooperative credit, which provided benefits to all the members within the system. Throughout the decades, the number of credit unions in the United States grew rapidly in the 1940s and 1950s – reaching over 10,000 in the 1960s and serving over six million Americans.

From its inception, credit unions were initially regulated by the Bureau of Federal Credit Unions until 1970, when there were over 24,000 credit unions in the US. The growth in the credit unions’ number led to the creation of the National Credit Union Administration through an act of the United States Congress in March 1970, which remains the regulatory board today.

Headquartered in Alexandria, Virginia, the NCUA is led by a three-member board of directors who are appointed by the president and confirmed by the Senate, with one member acting as the chairman. The board is responsible for setting matters of policy, issuing directives and regulations, and approving budgets. It also hears appeals concerning issues regarding individual credit unions.

The NCUA is divided into three administrative regions that are responsible for governing the affairs in specific US states and territories.

Western Region: Headquartered in Tempe, Arizona, the region is responsible for the affairs of the Western and Mid-Western United States, as well as Guam, Hawaii, and Alaska.

Eastern Region: Headquartered in Alexandria, Virginia, the region is responsible for most of the Northeastern US.

Southern Region: Headquartered in Austin, Texas, the region is responsible for the affairs of the “Deep South,” as well as the US Virgin Islands and Puerto Rico.

 

National Credit Union Share Insurance Fund (NCUSIF)

The National Credit Union Share Insurance Fund (NCUSIF) is one of the NCUA’s primary responsibilities. The Share Insurance Fund provides up to $250,000 of insurance in the event of credit union failure to millions of account holders in all federal and the majority of state-chartered credit unions.

The NCUSIF operates with the backing of the “full faith and credit” of the United States government, meaning that the government offers an unconditional guarantee to back the interest and principal of the fund’s debt.

 

Federal Financial Institutions Examination Council (FFIEC)

Another responsibility of the NCUA is acting as one of five regulators of the Federal Financial Institutions Examination Council (FFIEC). The FFIEC is responsible for developing uniform principles, standards, and report forms and for promoting uniformity in the supervision of depository financial institutions.

 

Additional Resources

CFI is the official provider of the Certified Banking & Credit Analyst (CBCA)™ certification program, designed to transform anyone into a world-class financial analyst.

In order to help you become a world-class financial analyst and advance your career to your fullest potential, these additional resources will be very helpful:

  • National Association of Insurance Commissioners (NAIC)
  • Checking Accounts vs. Savings Accounts
  • National Association of Federally-Insured Credit Unions (NAFCU)
  • Credit Union SWOT Analysis