CUNA published a white paper Thursday examining 3 policy decisions the NCUA will need to make concerning the wind-down of the agency’s Corporate Resolution Program. CUNA, the leagues and member credit unions will analyze the issues over the coming months and provide recommendations to the NCUA.
The NCUA and Congress established the Temporary Corporate Credit Union Stabilization Fund (TCCUSIF) as interim funding after 5 corporate credit unions became insolvent during the financial crisis. The obligations of the 5 corporates were funded by borrowing against the legacy assets in the form of NCUA Guaranteed Notes (NGNs), borrowing from Treasury and collecting stabilization assessments from all federally insured credit unions.
The Treasury borrowing has been repaid, and the Stabilization Fund has built a positive net position.
The total cost of the resolution is now projected to be between $5.5 billion and $7 billion, less than half the original estimates. Assessments were suspended after 2013, having amounted to $4.8 billion.
With these assessments and $5.6 billion in depleted capital from the five corporates (a combined $10.4 billion), credit unions have overpaid the now projected final costs of the resolution by between $3.4 billion and $4.9 billion.
Current projections show that between half and two thirds of the $4.8 billion of assessments will be rebated through the National Credit Union Share Insurance Fund, and between 15% and 30% of the $5.6 billion in depleted capital will be replenished.
Assessment rebates could begin this year. Capital replenishment won’t occur until 2020 or 2021.
As the Corporate Resolution Program winds down, NCUA will need to make 3 important policy decisions:
Credit unions that wish to have their views included in CUNA and league analysis should email firstname.lastname@example.org.