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| #  NCUA LETTER TO CREDIT UNIONS                                       |
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**NATIONAL CREDIT UNION ADMINISTRATION**

**1775 Duke Street, Alexandria, VA 22314**

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  **DATE: October 2008**              **LETTER NO.: 08-CU-22**

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**TO: Federally Insured Credit Unions**

**SUBJ: Share Insurance Coverage Enhancements**

Dear Board of Directors:

President George W. Bush signed into law the "Emergency Economic
Stabilization Act of 2008" on October 3, 2008, which temporarily
increases federal deposit insurance coverage. The new law amends the
share insurance coverage provided by the National Credit Union
Administration (NCUA) through the National Credit Union Share Insurance
Fund (NCUSIF) and the deposit insurance provided by the Federal Deposit
Insurance Corporation (FDIC). The NCUA Board also took action on October
3 to eliminate the concept of "qualified beneficiary" in determining
NCUSIF share insurance coverage.

The law increasing insurance coverage became effective on October 3,
2008, and will remain in place through December 31, 2009. Credit unions
should note this time limitation in their communications with members.
The new law provides the following:

-   An increase in the minimum NCUSIF coverage from \$100,000 to
    \$250,000 on member share accounts. This includes all account types,
    such as regular share, share draft, money market, and certificates
    of deposit. Individual Retirement Account and Keogh account coverage
    remains unchanged at up to \$250,000 separate from other types of
    accounts owned.

The increase in the minimum share insurance coverage to \$250,000 will
not result in an increase to your share insurance premium or operating
fee. Changes will be made to the 5300 report for the December 2008
reporting cycle to address the change in coverage.

**Basic NCUA Share Insurance Coverage Limits**[^1]

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**\*\*The legislation authorizing the increase in share insurance
coverage limits is effective October 3, 2008, through December 31,
2009.**

**Change in NCUA Rules -- "Qualified Beneficiary"**

To maintain parity with FDIC insurance coverage, the NCUA Board approved
a change to Part 745.4 of the NCUA Rules and Regulations eliminating the
concept of "qualified beneficiary". Beneficiaries are now defined as
natural persons as well as charitable organizations and other non-profit
entities recognized as such under the Internal Revenue Code of 1986. For
members with revocable trust accounts totaling no more than \$1,250,000,
coverage will be determined without regard to the proportional
beneficial interest of each beneficiary in the trust.

Under the amended rules, a trust account owner with up to five different
beneficiaries named in all of his or her revocable trust accounts at one
NCUA-insured institution will be insured up to \$250,000 per
beneficiary. Revocable trust account owners with more than \$1,250,000
and more than five different beneficiaries named in the trust(s) will be
insured for the greater of either: \$1,250,000 (5 X \$250,000) or the
aggregate amount of all the beneficiaries' interests in the trust(s),
limited to \$250,000 per beneficiary.

**Share Insurance Information, Brochures, Posters, and Decals:**

NCUA has created the Share Insurance Tool Kit webpage that provides an
updated version of the "Your Insured Funds" brochure as well as new
posters and print ads reflecting the increase in insurance coverage to
\$250,000. In addition to versions that can be printed from the NCUA
website, new brochures and NCUA decals will be available in 4 to 6 weeks
and can be ordered using the information found at:
<http://www.ncua.gov/Publications/pub_avail/pub_avail.html>

I encourage you to share these changes with your members and to remind
your members that not one penny of federally insured shares has ever
been lost. America's 89 million credit union members will greatly
benefit from the above changes. NCUA looks forward to working with
federally insured credit unions to implement these share insurance
enhancements.

Should you have questions, please contact your district examiner,
regional office, or state supervisory authority.

> Sincerely,
>
> /S/

Michael E. Fryzel

> Chairman

[^1]: **These insurance coverage limits refer to the total of all shares
    that a member(s) has at each NCUA-insured credit union. The examples
    provided only show the most common ownership categories that apply
    to individual and family shares, and assumes that all NCUA
    requirements are met.**