This is an historic day and an historic distribution.
It is also a day many predicted would never come.
It is a day that, as recently as last fall, some didn’t want to come because they opposed closing the Stabilization Fund and distributing its assets to the Share Insurance Fund as the law requires. They were wrong.
This distribution is historic because, at nearly three-quarters of a billion dollars, it is nearly 15 times larger than the last distribution of $52 million in 2007, more than seven times larger than the distribution of $99.5 million in 2001, and larger than the cumulative amount of all previous distributions to credit unions since the capitalization of the Share Insurance Fund.
It is historic because, to the best of my knowledge, the Share Insurance Fund is the only federal deposit insurance fund that has ever made a distribution to all insured institutions. The Federal Deposit Insurance Fund, which insures commercial banks and thrifts, has never made a similar distribution to insured banks, most of whom continue to pay premiums every year to build-up their Deposit Insurance Fund.
It is historic because if we had not closed the Stabilization Fund and distributed its assets to the Share Insurance Fund, credit unions would probably be paying more than $1.3 billion just to bring the Share Insurance Fund’s equity ratio up to 1.3 percent, the prior normal operating level. To put that into perspective, if we had not closed the Stabilization Fund, this year credit unions would have had to pay more money than at any other time since the capitalization of the Share Insurance Fund, other than the special assessment levied in 2011. Premiums and special assessments levied in every other year of the corporate crisis were smaller than what would have been needed this year to replenish the Share Insurance Fund. Fortunately, because we acted, no special assessments or premiums will be necessary this year.
When you add the $736 million distribution credit unions will receive this year to the more than $1.3 billion in special assessments they are avoiding, the total is over $2 billion—a huge benefit to credit unions that will allow them to lend more to their members, at lower rates, and pay higher rates on member deposits. This is a lot of money for provident and productive purposes.
It is historic because additional distributions to credit unions are possible between now and 2022, when the remaining legacy assets are disposed of, if the economy remains strong and if there are not any unusually large, unanticipated insurance losses.
It is historic, because as I mentioned after the report on the status of the fund, it is now stronger than it ever has been before and is positioned to survive either an adverse or a severely adverse recession.
This historic distribution would not be possible without the ability of the current NCUA Board to reach a bipartisan—or, more accurately, a non-partisan—agreement on the best path forward; without a lot of courageous decision-making by previous Boards; without recoveries from our lawsuits; without improvements in the values of the legacy assets; and without a lot of hard work by NCUA staff over the past decade. Setting-up the NCUA Guaranteed Notes program, managing the legacy assets and troubled corporate and natural-person credit unions, filing and settling lawsuits, and then combining the two funds was a Herculean task.
This process, and the resulting distribution, was a team effort that has demonstrated the strength and resilience of our national system of cooperative credit and this agency. It has protected the life savings of more than 110 million Americans and their families, and it has preserved and enhanced the ability of federally insured credit unions to be a source of credit for provident and productive purposes.
I want to thank my colleague, Chairman McWatters, and his Chief-of-Staff, Sarah Vega, for working cooperatively with my staff and me, and with the agency’s staff, to make this historic day possible. This demonstrates what men and women of good will can accomplish when they endeavor to reach a higher goal for the common good.
Mr. Chairman, the check may not be in the mail yet, but it will be in the near future. I enthusiastically support this proposed distribution.