Corporate System Resolution Costs

On September 28, 2017, the NCUA Board unanimously voted to close the Temporary Corporate Credit Union Stabilization Fund (Stabilization Fund) effective October 1, 2017, ahead of its sunset date of June 30, 2021. All remaining funds, property, and other assets were transferred to the National Credit Union Share Insurance Fund (Insurance Fund), representing a major milestone in the wind-down of the Corporate System Resolution Program.

While the net projected assessment range is no longer relevant, the NCUA will continue to report the total gross and net corporate system resolution costs (Resolution Costs), as well as the NGN and legacy asset data that has been reported historically. Additional reporting on NCUA’s receivable from the estates, the estimated impact to the equity ratio, and potential recoveries of depleted corporate capital will also be provided.

Managing to the least long-term cost consistent with sound public policy is one of the core principles established by the NCUA Board as part of the Corporate System Resolution. The Resolution Costs are based in large part on a range of estimated losses on the Legacy Assets, as well as costs related to losses on the sale of other assets, bridge corporate transition expenses, borrowing costs, and liquidation expenses of the corporate credit unions. The sources of payment include assessments on federally insured credit unions, depleted corporate capital, and recoveries received as a result of legal action.

The table below shows the total corporate system resolution costs—both gross and net of legal recoveries—as well as the breakout between federally insured credit unions and depleted corporate capital holders as of June 30, 2018.

Corporate System Resolution Costs
Description Amount (in Billions)
Total Projected Resolution Costs (Gross) $8.9 to $9.2
Legal Recovery Proceeds (Net) $3.8
Total Projected Resolution Costs (Net) $5.1 to $5.4
Net Projected Loss to Federally Insured Credit Unions $1.6
Net Projected Loss to Depleted Corporate Capital $3.5 to $3.8

Federally insured credit unions paid assessments of $4.8 billion in total. Depleted corporate capital claims on the estates total $5.6 billion.

Generated using projected legacy asset cash flows that have not been realized. Actual cash flows could vary significantly from projections. Point in time estimates based on best available information. Does not include projected legal recoveries.

NCUA has received substantial recoveries through pursuit of legal claims against securities underwriters. Net proceeds from these recoveries will reduce future projected ranges of remaining assessments. See NCUA’s Legal Recoveries website for details.

Details related to the individual Legacy Assets can be found at NCUA’s Corporate Credit Union FOIA Requests page via the following link: https://www.ncua.gov/services/Pages/freedom-of-information-act.aspx.

Resolution Costs and NGNs

Q&A Resolution Costs and NGNs

 

NCUA staff can be reached at ngnquestions@ncua.gov.