ALEXANDRIA, Va. — NNCUA announced the end is nigh for the Temporary Corporate Credit Union Stabilization Fund, and it may even wind up rebating some of the past assessments back to credit unions in 2021.
While analysts have told CU Journal that NCUA may not need to charge another assessment to support the agency's corporate stabilization efforts and could be in a position to issue rebates on the fund, it's the first time the regulator has said that is what it's aiming to do.
The net proceeds from the $1.4 billion JPMorgan Chase settlement in November 2013 and the continued improvement in the performance of the legacy assets underlying the NCUA Guaranteed Notes program has further reduced the assessment range that has been steadily shrinking.
After closely analyzing the legacy assets of the five failed corporates,
The net remaining Stabilization Fund projected assessment range now runs from negative $1.9 billion to negative $400 million, compared to the negative $200 million to $1.6 billion projection from the second quarter of 2013. As long as both ends of the range remain negative, there will likely be no need for future assessments, the agency said.
"Our legal team is diligently pursuing our claims against the Wall Street securities firms who sold faulty securities to five corporate credit unions, causing them to fail and triggering a crisis in the system," NCUA Board Chairman Debbie Matz said. "That hard work is paying off, and we will continue our efforts to hold accountable those who helped precipitate the crisis."
At its November 2013 board meeting NCUA announced there would be no planned Stabilization Fund assessment this year.
Following NCUA's $1 billion repayment to Treasury in December 2013, the agency must still repay $2.9 billion in outstanding Treasury borrowings before any remaining Stabilization Fund distributions can be legally made to credit unions, NCUA stated. As a result, any potential repayment to credit unions is not likely to occur prior to expiration of the Stabilization Fund in 2021.
NCUA noted, however, that future Stabilization Fund ranges can vary "significantly" from current projections. The agency emphasized that the assessment range is generated using legacy asset cash flows projected by BlackRock, and that those cash flows have not been realized.
NCUA has litigation pending against several other financial institutions, including Barclays Capital, Credit Suisse, Goldman Sachs, RBS Securities, UBS Securities, and Morgan Stanley, alleging the banks sold faulty mortgage-backed securities to five corporate credit unions — WesCorp, U.S. Central, Southwest, Constitution, and Members United — all of which subsequently failed.
NCUA's new projections and other information can be found at
