The NCUA’s Tuesday announcement that it will repay the U.S. Treasury in full is a good sign for credit unions, said CUNA Chief Policy Officer Bill Hampel. The agency announced it will fully repay the $1 billion outstanding balance to the Treasury before Oct. 31.
“This is another good sign about the improving condition of the corporate stabilization fund,” Hampel said. “It restores NCUA’s full Treasury borrowing capability for future use, and it’s a further indication that credit unions can look forward to partial refunds of assessments and some restoration of depleted capital in the conserved corporates. CUNA looks forward to the agency providing appropriate credit union involvement as to the distribution of the growing surplus in the fund.”
When that payment is made, the Temporary Corporate Credit Union Stabilization Fund’s outstanding borrowings from the U.S. Treasury will be fully repaid. NCUA’s $6 billion borrowing line with Treasury remains available to satisfy future agency contingent funding needs, including obligations of the NCUA Guaranteed Notes Program.
NCUA Chair Rick Metsger called the announcement an “historic moment for both the NCUA and the entire credit union system.”
According to the agency, no funds will be available to provide federally insured credit unions with an immediate rebate of stabilization fund assessments.
Additionally, no funds are available for any recoveries by investors with claims for depleted capital of the failed corporate credit unions. NCUA must first satisfy any outstanding senior obligations of the Stabilization Fund and corporate credit union asset management estates.
Projected values of the stabilization fund and the corporate credit union asset management estates may not be realized until 2021.
NCUA will provide additional information in the near future related to the timing of potential rebates and capital recoveries.
NCUA started borrowing from the Treasury at the height of the economic crisis, starting in June 2009 with $1 billion. From February 2010 to October 2012, the agency borrowed an additional $9.4 billion but also repaid $5.8 billion during that period.