WASHINGTON (7/24/15)--Future Temporary Corporate Credit Union Stabilization Fund assessments are unlikely, National Credit Union Administration staff said Thursday. Speaking at the agency’s monthly board meeting, Director of the Office of Examination and Insurance Larry Fazio said the performance of the legacy assets of five failed corporate credit unions and the NCUA Guaranteed Notes program led the agency to that conclusion.
“If the latest projections hold true, there will be no need for any additional assessments, and there is an increasing likelihood of a refund for credit unions at some point in the future,” Fazio said. “This is based on point-in-time projections using the best available modeling techniques and assumptions. Actual results can vary due to changes in economic conditions and other factors.”
According to Fazio, both ends of the range of net projected remaining assets are negative. This is due to a combination of economic recovery and the $1.75 billion in settlements with firms that sold faulty mortgage-backed securities to the five failed corporate credit union.
The stabilization fund is currently projected to conclude in 2021 with a surplus of $700 million to $2.5 billion, and federally insured credit unions could receive a rebate after the fund expires.
Fazio’s description of the situation is similar to the assessment of CUNA’s economics staff over the past two years. CUNA’s economists have for some time suggested that no more assessments are required, and that credit unions can look forward to a modest rebate by 2021.
Fazio also noted that there are not funds currently available to provide rebates, since the NCUA must first repay $2.6 billion to the U.S. Treasury.
There will be no NCUA board meeting in August, and the next quarterly report on the stabilization fund is scheduled for the September meeting.