PORTLAND, Ore.–NCUA plans to make a $300-million payment to the Treasury Department from the corporate stabilization fund. NCUA confirmed to CUToday.info that the payment will be made. The plan was first mentioned by the agency’s vice chairman, Rick Metsger, during the American Association of Credit Union Leagues’ Summer Meeting here, according to sources. NCUA owes $2.5 billion to Treasury related to the Stabilization Fund.
As reported earlier by CUToday.info, the Stabilization Fund has recorded a positive net position for the last year and according to the most recent report its performance continues to improve.
The NCUA Guaranteed Notes’ (NGN) remaining balances of $15.2 billion are backed by legacy assets with a market value of $16.7 billion, with NCUA saying that as long as the legacy asset values hold relatively steady on no additional funding will be needed to pay back NGN investors.
Before credit unions can see any refunds on their assessments, the NGN investors must first be repaid, including the U.S. Treasury.
NCUA’s Director of Examination and Insurance, Larry Fazio, said during the board meeting that Treasury will most likely be repaid in 2017. The next maturities take place in 2020 and 2021, with NCUA estimating a surplus that will range from $700 million to $2.5 billion.
With the Stabilization Fund set to expire in June of 2021, there will be no rebates to credit unions ahead of that date, said Fazio.
CUNA, Matz Issues Statements
In response to NCUA’s plans to make the $300 million payment, CUNA issued a statement that it “appreciates Vice Chairman Metsger telling us that the corporate stabilization fund continues to improve and that NCUA plans to pay another installment on the Treasury funding. We remain confident that once the Treasury has been fully repaid, credit unions will receive partial refunds of their stabilization assessments.”
In a statement to CUToday.info, NCUA Chairman Debbie Matz said, “NCUA’s careful management of the overall corporate resolution effort has brought us one step closer to bringing closure to the financial crisis that threatened the entire credit union system. This effort, combined with a determined strategy to hold accountable the Wall Street firms that sold billions of dollars in toxic assets to the five failed corporate credit unions, has saved credit unions billions of dollars.
“After Treasury, in about 2021, has been fully repaid and other obligations are satisfied, and the Stabilization Fund expires, federally insured credit unions could potentially receive a rebate. Sound and prudent management creates that possibility.”