ALEXANDRIA, Va. (Nov. 25, 2014) –The National Credit Union Administration has updated information about the costs of the Corporate Resolution Program and the performance of the NCUA Guaranteed Notes Program.
The upper and lower ends of the projected Stabilization Fund assessment range remain negative, from a negative $2.2 billion to a negative $200 million. It is unlikely credit unions will be charged future assessments as long as the projected assessment range stays in negative territory. However, the projections are subject to change based on the performance of the failed corporates’ legacy assets, future legal recoveries and economic variables such as interest rates, unemployment and housing costs.
“The fact that the assessment range is a double negative is a positive for credit unions,” NCUA Board Chairman Debbie Matz said. “We’ve come a long way since 2010, when the assessment projections ranged as high as $9.2 billion, but we have more work to do. Our efforts to hold accountable those Wall Street firms responsible for the corporate crisis continue, and we must continue to effectively manage the Stabilization Fund.”
Credit unions have paid $4.8 billion in assessments since the creation of the Stabilization Fund in 2009. The Stabilization Fund is scheduled to expire in 2021. Matz said NCUA is still obligated to repay $2.6 billion in outstanding borrowings from the U.S. Treasury. Principal and interest on the NCUA Guaranteed Notes, as well as other obligations of the Stabilization Fund, also must be fully repaid before NCUA can distribute any remaining funds to credit unions.
Interested parties can read Questions and Answers: Second Quarter 2014 Corporate System Resolution Costs and Assessment Range for detailed information about costs incurred to date and projected future assessment ranges over the life of the Stabilization Fund.
To promote transparency, NCUA will continue providing periodic updates on the estimates about the costs associated with the Corporate System Resolution, the performance of the NGN Program and the total anticipated assessments credit unions will pay during the life of the Stabilization Fund. All of these can vary over time. NCUA uses BlackRock, an independent securities valuation firm, to project the future performance of the legacy assets in the Guaranteed Notes, a key component of this analysis.
NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share
Insurance Fund, insuring the deposits of account holders in all federal credit unions and the overwhelming majority of
state-chartered credit unions. At MyCreditUnion.gov, NCUA also educates the public on consumer protection and financial literacy issues.