WASHINGTON—CUNA is estimating that credit unions can expect refunds from the Corporate Stabilization Fund in the range of at least $1.6 billion to $3.2 billion. But don’t look for a check anytime soon.
That’s a figure arrived at by CUNA Chief Economist and Chief Policy Officer Bill Hampel after reviewing NCUA’s recently released semiannual update on the Corporate Stabilization Fund.
“From the update, we can conclude that credit unions can look forward to substantial refunds of the costs they paid as the corporate credit union crisis unfolded. But that won’t happen soon,” said Hampel.
Hampel pointed out that between 2008 and 2012 credit unions paid $10.4 billion as a result of the failure of five corporate credit unions: $5.6 billion as extinguished capital at the corporates and $4.8 billion as assessments paid by all federally insured credit unions.
“In 2012, the projected range of total losses to the fund was $13.9 billion to $16.1 billion. Had those estimates held up, credit unions would still be on the hook for $3.5 billion to $5.7 billion in additional assessments,” said Hampel.
The fund’s condition has improved substantially since then, continued Hampel, saying that NCUA’s latest estimates for total losses have fallen to the range of $7.2 billion to $8.8 billion, and further improvement is likely.
“Therefore, instead of facing additional assessments, credit unions can expect refunds in the range of at least $1.6 billion to $3.2 billion,” he said.
Hampel explained that the improvement is due to dramatic improvements in the economy and housing market, successful lawsuits against many of the investment banks that packaged subprime mortgages into the securities the corporates bought, and NCUA’s overestimation of the extent of the losses.
NCUA officials have in the past indicated that a refund will likely eventually be paid to credit unions, but only after Treasury has been fully repaid and other costs covered, and that likely won’t happen until at least 2021.