NCUA distributes additional $395 million for corporate credit union failures

The National Credit Union Administration will distribute $395 million in funds to thousands of credit unions as part of its ongoing effort to resolve the dissolution of four corporate credit unions after the financial crisis.

The disbursement is the latest installment of the NCUA's Corporate System Resolution program, which began in the wake of the 2008 financial crisis to help the regulatory agency offset the failures of U.S. Central, Western, Southwest, Members United and Constitution corporate credit unions over a longer period of time. 

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Including the current distribution, the program has since returned more than $2.6 billion to former members and paid-in-capital shareholders, and almost $292 million in dividends to shareholders.

"The NCUA has reached another milestone in winding down the remaining asset management estates under the successful Corporate System Resolution program. … Thanks to the diligent efforts of the NCUA team over more than a decade, we continue to fulfill our fiduciary responsibility to return these funds to capital holders," Todd Harper, chairman of the NCUA, said in a press release on Aug. 29.

Frank Gargano

Corporate credit unions are designed to assist consumer or "natural person" credit unions with transferring funds between institutions without the assistance of banking proponents.

The NCUA said it will distribute $313 million to more than 400 membership and capital shareholders of Members United, Constitution and U.S. Central corporate credit unions, following an earlier round of payments issued in March. The agency will additionally dispense $82 million in dividends to more than 1,100 shareholders of Southwest Corporate.

The initiative has organized four rounds of distributions to date, with the current set estimated to go out before the end of September.

"The federally insured credit unions receiving these distributions will have the capacity to lend more and better offer safe, fair, and affordable financial products. … That is good for credit union members and for our economy," Harper added in the release.