WASHINGTON–The corporate credit union “bailout” that was engineered by NCUA as the financial crisis hit credit unions appears to be a success, but it’s “hard to say,” according to one analyst.
The reason, said the co-founder and chairman of Callahan & Associates, is that NCUA continues to operate in “secrecy about how it’s managing and distributing the assets of the Temporary Corporate Credit Union Stabilization Fund, money it has yet to begin distributing to the natural-person credit unions who are the rightful owners of those funds.”
Writing on Credituions.com, Filson noted the five asset management estates created to manage and then liquidate the remains of the corporates seized by the NCUA in the depths of the Great Recession report a $570.1-million gain in total equity in the quarter ending June 30. That amount is on top of the $161 million gain the regulator said the five AMEs saw in the first quarter of 2016, said Filson.
“The primary source of the second quarter increase was approximately $714 million in legal recoveries from the investment houses that sold toxic securities to the corporates,” wrote Filson. “That $714 million resulted in a net gain of $519 million after the lawyers were paid $195 million. Each of the estates also recorded an increase in asset values and net spread income, according to NCUA figures, bringing the total gain for the second quarter to $570.1 million.”
Filson, who previously worked at NCUA as president of the Central Liquidity Facility (CLF) and director of the Office of Programs, which includes the NCUSIF and the examination process, questioned why the NCUA has not yet made public how the funds were distributed among the AMEs, noting credit unions have also not received a “single dollar” of the $3.1 billion the agency has recovered from Wall Street to the credit unions that invested in these corporates.
Filson said he believes the “need for transparency and clarity only grows as the 2021 date for the TCCUSF to be shut down draws “inexorably closer.”
The entire article can be found here,