NCUA Expands Corporate Resolution Program

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ALEXANDRIA, Va. – The NCUA Board approved the hiring of five additional personnel to help manage the servicing and monitoring of its corporate credit union resolution program, which the credit union regulator says will take at least another 10 years to complete.

As part of the expansion of the program, NCUA is creating a Securities Management and Oversight Committee to oversee the $28.6 billion in NCUA Guaranteed Notes issued to the public to help finance the corporate program. The additional hires, estimated to cost $200,000 a year, are in addition to the three-and-a-half full-time existing NCUA staff that now oversees the corporate resolution.

NCUA, which approved a $2 billion assessment Monday to help pay costs for the corporate program, estimates the Temporary Corporate CU Stabilization Fund, which is financing the program with a low-interest loan from the U.S. Treasury, will incur costs of $12.2 million in 2012. Those costs will be figured into next year’s corporate assessment.

The expanded program will manage the estates of the five corporate failures, which hold more than 2,800 bonds, as well as the NGNs. NCUA said long-term monitoring of the bonds are likely to be much longer than 10 years in order to conduct a re-securitization of the re-securitization once the NGNs mature.

As part of the expanded program, NCUA plans to hire two analysts in the capital markets division of Examinations and Insurance, one investment program manager in its Asset Management and Assistance Center, which resolves credit union failures, and two program support officers for the new oversight committee.

NCUA has re-securitized almost $50 billion in toxic mortgage-backed securities once held by the five corporate failures: U.S. Central FCU, WesCorp FCU, Members United Corporate FCU, Southwest Corporate FCU and Constitution Corporate FCU.

 

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