WASHINGTON — In the wake of the JPMorgan Chase settlement and
“Every six months NCUA updates the valuation of the legacy assets. The most recent numbers show credit unions are about $1.5 billion better off than they were several days before,” explained CUNA Economist Bill Hampel in a conference call Monday. “The new update put the total amount of assessments necessary to be paid between [negative] $2 million to $1.5 billion.”
Factoring in the recently announced $1.4 billion NCUA will receive from the JPMorgan settlement--which should net out to about $1 billion—that means credit unions are actually about $2.5 billion ahead of where they were just a week ago.
“That puts the remaining assessments somewhere between [negative] $1 billion and plus a half billion,” Hampel said. “If there is money left over, then some funds will be rebated to credit unions several years down the road.”
While being careful to note that a lot can happen between now and then, Hampel suggested the odds are in favor of credit unions winding up with some money rebated back to them.
“There are three qualifiers,” he said. One is if the economy tanks, that, of course, could lessen the chances of—or simply the amount of—any rebate. But if the economy improves, the opposite would happen. Moreover, there are still other related settlements outstanding, which could help boost the potential for—and/or size of—a rebate.
“We look at the midpoint of the range [of NCUA’s valuation], but because NCUA is very conservative, the lower end of the range is more instructive than the midpoint,” Hampel offered, giving credence to the possibility of a rebate “four to six years from now.”
Separately, CUNA was critical of the 6.7% budget hike at NCUA.
“This is the sixth straight year that NCUA has increased its budget, at a time when the rest of the world is experiencing budget cuts in light of the recession,” CUNA said.
