ALEXANDRIA, Va.–At NCUA’s board meeting Thursday, chairman Rick Metsger said the quarterly report on the Corporate Stabilization Fund “marked a milestone in the recovery from the Great Recession and corporate CU crisis.”
Metsger was referring to the fact the NCUA will make a payment to Treasury May 27 of $700 million, which will bring the fund’s outstanding borrowing with the Treasury down to $1 billion.
Metsger noted that the original borrowings from the Treasury were $11.2 billion, and that peak outstandings reached $5.1 billion.
“I asked (CFO) Rendell Jones if we could make a payment of $700,000,001 million, and that I would be happy to toss in the $1 to get the total below $1 billion,” joked Metsger. “But Rendell told me the Treasury likes round numbers.”
Jones told the board that the agency to date has recovered more than $3.1 billion in litigation related to the sale of faulty securities sold to corporate credit unions.
NAFCU applauded NCUA’s “vigilance” in pursuing recoveries from Wall Street firms on the sale of faulty securities that led to the downfall of five corporate credit unions.
“We encourage the agency’s continued efforts in this regard and urge full transparency on the recovery process and any future rebate to credit unions,” said Executive Vice President and General Counsel Carrie Hunt.
Jones reiterated that no more assessments are expected and that any rebate is contingent largely on the performance of the NGN notes and future legal recoveries.
NCUA reported that for the quarter ending March 31, 2016, the Stabilization Fund’s net position increased by $78.2 million to a positive $618.6 million, up from $540.4 million at the end of the previous quarter, based on the best available preliminary and unaudited information.
"While the Stabilization Fund continued to have a positive net position in the first quarter, no funds are available to provide federally insured credit unions with an immediate rebate," the agency said in a statement. "NCUA must first repay all outstanding borrowings from the U.S. Treasury and satisfy any outstanding NCUA Guaranteed Notes obligations. Future changes in the economy or the performance of the legacy assets, which secure the NCUA Guaranteed Notes, could change the value of the assets NCUA and the Stabilization Fund can eventually access at the end of the NCUA Guaranteed Notes Program."
The change in net position primarily resulted from guarantee fees earned and improvements in projected cash flows relating to the legacy assets that secure the NCUA Guaranteed Notes, NCUA said.
Created by Congress in 2009, the Stabilization Fund assumed the losses associated with the failure of five large corporate credit unions and allowed the credit union system to absorb these losses over time. By law, the Stabilization Fund is scheduled to expire in 2021.
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