BISMARCK, N.D.–North Dakota’s credit unions are reporting they have “once again been denied” by NCUA a recovery they have been seeking on $10.5 million in membership capital account (MCA) assets and $3.3 million in paid in capital (PIC) assets recovered from the liquidation of U.S. Central.
The funds are being sought by 28 credit unions in the state.
As CUToday.info reported earlier, the North Dakota credit unions were first notified in May 2021 that they would not be included in the distribution of recovered U.S. Central assets due to the liquidation of Midwest Corporate FCU in 2011.
The Dakota CU Association said that since the Bismarck, N.D.- based Midwest Corporate was the MCA holder of U.S. Central assets, the NCUA claimed the owners of Midwest Corporate had no rightful claim even though a claim certificate for the assets was provided by the federal agency.
“This is very disappointing news,” said DakCU President/CEO Jeff Olson. “First, what we had was essentially a government-forced liquidation through the Corporate Stabilization Program, where corporate owners were forced to choose between recapitalizing after writing off millions in losses the previous year, to merge with another corporate, or to liquidate.”
What Letter States
According to the association, in the denial letter sent to the 28 credit unions by the agency, NCUA stated, “…you suggest that Midwest’s claim receipt was transferred to its former shareholders, including your credit union. However, you fail to provide any factual or legal authority in support of that suggestion.”
But in response Olson is asserting the North Dakota credit unions are the “collateral damage” from negligence on the part of the NCUA.
“Consider the fact – the NCUA handled the liquidation of Midwest Corporate in 2011. The NCUA’s liquidating agent should have known that a claim certificate was issued, and these assets were in the process of being recovered,” Olson said. “From our perspective, the NCUA itself and the liquidating agent of U.S. Central are at fault here.”
The association said the denial letter from NCUA does provide for an appeal process through agency review or judicial determination, both subject to deadlines and additional procedures.
In the meantime, DakCU said the North Dakota credit unions are waiting for an answer to what happened to their assets, with the association asking, “Did the NCUA keep the $10.5 million; did they distribute the assets elsewhere?”
‘Obstruction & Bureaucratic Hurdles’
“This is a clear case of obstruction through bureaucratic hurdles and complicated language where the process is the punishment, and does not provide justice,” stated Olson.
The Dakota Credit Union Association, which represents credit unions in both North Dakota and South Dakota, noted it has been spearheading the fight on the asset recovery efforts and has received support from both North Dakota Sen. Kevin Cramer, who serves on the Senate Banking Committee, and North Dakota’s senior senator, John Hoeven.
The senators had previously sent a joint letter to NCUA Chair Todd Harper that stated in part, “We encourage you to stay in close communication with the Dakota Credit Union Association as they work through the claims process to ensure all proper claims are satisfied to the greatest extent possible, and that these recovered assets are returned to their rightful owners.”
According to the association, the North Dakota credit unions affected by this latest development will be meeting in the next few days to determine their next course of action.