With the NCUA’s Wednesday announcement that credit unions can expect no further stabilization fund assessments, CUNA Chief Policy Officer Bill Hampel said CUNA will continue to work with the agency to ensure refunds come as soon as possible. The NCUA posted updated information on the costs of its Corporate Resolution Program and the performance of the NCUA Guaranteed Notes Program online Wednesday.
The upper and lower ends of the projected assessment range for the Temporary Corporate Credit Union Stabilization Fund remain negative, from negative $2.4 billion to negative $4 billion, respectively.
“This is welcome news that the corporate stabilization fund continues to improve, due both to an improving economy and successful legal actions brought by NCUA,” Hampel said. “The midpoint of the range of ‘net projected assessments’ improved by $800 million since the last semi-annual report, from negative $2.4 billion to negative $3.2 billion. A negative net projected assessment implies an eventual refund for credit unions.
“The exact form of the refund (the distribution between assessments and extinguished capital) is not yet clear, and the refunds are unlikely to occur until 2021, but the outlook is improving,” Hampel added. “CUNA will continue to engage with NCUA to ensure that refunds are as large as possible and occur as soon as possible.”
Credit unions have paid $4.8 billion in assessments since the creation of the stabilization fund in 2009. The fund is scheduled to close in 2021.
The NCUA is still obligated to repay $1 billion in outstanding borrowings from the U.S. Treasury, down from a peak of $5.1 billion in 2012.
Principal and interest on the NCUA Guaranteed Notes, as well as other obligations of the stabilization fund, also must be fully repaid before NCUA can distribute any remaining funds to credit unions.
More information on the programs can be found here.