ALEXANDRIA, Va. –NCUA is reporting that by Oct. 31 it will fully repay the $1 billion outstanding balance on the agency’s borrowing line with the U.S. Treasury.
When that payment is made, the Temporary Corporate Credit Union Stabilization Fund’s outstanding borrowings from the U.S. Treasury will be fully repaid, the agency said. 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 noted that while Treasury borrowings will be repaid, no funds will be available to provide federally insured credit unions with an immediate rebate of Stabilization Fund assessments, which has been a consistent question from credit unions and their associations.
Additionally, no funds are available for any recoveries by investors with claims for depleted capital of the failed corporate credit unions. NCUA reminded it must first satisfy any outstanding senior obligations of the Stabilization Fund and corporate credit union asset management estates.
Possible rebates or recoveries are based on projections that can change over time.
“This marks an historic moment for both NCUA and the entire credit union system,” NCUA Board Chairman Rick Metsger said in a statement. “The success of the corporate resolution program is a testament to the hard work and perseverance of our entire team, and I extend my deep personal gratitude to all of them for making this possible.”
According to the agency, projected values of the Stabilization Fund and the corporate credit union asset management estates may not be realized until 2021. Future changes in the economy or the performance of the legacy assets that secure the NCUA Guaranteed Notes could change their value.
NCUA will provide additional information in the near future related to the timing of potential rebates and capital recoveries.
In response, CUNA's chief policy officer, Bill Hampel, said, “This is another good sign about the improving condition of the corporate stabilization fund. 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.”
NAFCU applauded the "steadfast efforts" of Metsger and NCUA Board Member Mark McWatters, and their leadership on this "vital matter.”
“This milestone is a testament to the safety and soundness of the credit union industry," said President and CEO Dan Berger. "NAFCU will continue to urge the agency to be fully transparent in how and when the funds will be refunded to credit unions. NAFCU will remain vigilant in ensuring that NCUA manages the fund in a way that is most beneficial to credit unions.”