ALEXANDRIA, Va.–NCUA has released detailed updates on the costs of the Corporate Resolution Program and the performance of the NCUA Guaranteed Notes Program.
The updates are from the end of the fourth quarter of 2016.
According to the agency, the upper and lower ends of the projected assessment range for the Temporary Corporate Credit Union Stabilization Fund remain negative, from negative $4.9 billion to negative $3.5 billion, respectively. As long as both ends of the range remain negative, it is unlikely NCUA will charge credit unions future Stabilization Fund assessments, the agency said.
“Credit unions have paid $4.8 billion in assessments since the creation of the Stabilization Fund in 2009,” NCUA said in a statement. “The Stabilization Fund is scheduled to close in 2021. NCUA continues to explore funding options for the remaining life of the program, including possible early termination of the Stabilization Fund with all obligations transferred to the Share Insurance Fund. There are accounting and legal matters and other factors that will bear on this decision.”
NCUA said the assessment projections are based on the performance of the failed corporates’ legacy assets, legal recoveries and economic variables such as interest rates, unemployment and housing costs. Those variables and projections are subject to change. NCUA uses BlackRock, an independent securities valuation firm, to project the future performance of the legacy assets in the NCUA Guaranteed Notes Program.
As of Jan. 31, 2017, NCUA noted it had recovered net proceeds of more than $3.2 billion from firms that sold the faulty mortgage-backed securities to the failed corporate credit unions. NCUA is using the proceeds from these settlements to reduce the costs that federally insured credit unions need to pay for the corporate resolution.