NCUA to return $395 million to credit unions next month

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Official NCUA seal. (Source: NCUA)

The NCUA announced Monday that it will pay credit unions $395 million in September from the remains of four corporate credit unions it liquidated in 2010.

The NCUA, as liquidating agent, will distribute $313 million to more than 400 members and paid-up shareholders of former Members United, Constitution and US Central corporate credit unions. It will also distribute $82 million in dividends to more than 1,100 Southwest Corporate shareholders.

The NCUA made capital distributions to Southwest Corporate equity holders last year.

The distribution announced on Monday should take place by September 30. With this fifth distribution, the NCUA will have returned more than $2.6 billion to former members and shareholders in paid-up capital and nearly $292 million in dividends to shareholders.

“The NCUA has taken another step in removing remaining assets from asset management as part of the successful Enterprise System Resolution Program,” NCUA Chairman Todd Harper said in a statement. hurry.

Todd Harper Todd Harper (Source: NCUA)

“Through the diligent efforts of the NCUA team for more than a decade, we continue to fulfill our fiduciary responsibility to return these funds to equity holders,” he said. “As a result, federally insured credit unions that receive these distributions will have the ability to lend more and better offer safe, fair and affordable financial products. It’s good for credit union members and good for our economy.

The NCUA has already made four rounds of distributions from the corporate credit unions’ asset management assets. In 2020, 2021 and the first quarter of 2022, distributions were made to equity holders of Southwest, Members United, Constitution and US Central.

The NCUA established the Corporate System Resolution Program “to stabilize, resolve, and reform the corporate credit union system in the wake of the 2008 financial crisis.” He said the program enables the credit union system to absorb the failures of corporate credit unions in the central United States, west, southwest, united members and constitution in the United States. over time.

Some of the recoveries came from lawsuits filed by the NCUA against major banks that participated in the sale of residential mortgage-backed securities that were a major contributor to the financial crisis. The NCUA said the securities also contributed to its liquidation of five credit unions.

Chip Filson, a former NCUA official who blogs about credit union issues, criticized the wisdom of the NCUA’s liquidation of these companies. He noted that the losses projected by the NCUA never materialized and the estates instead posted large surpluses.

Chip Filson Chip Filson

CU time asked for Filson’s comment regarding Monday’s report. He emailed comments and questions, which were shared with the NCUA to give them an opportunity to respond. They were:

  • Asset Management Assets (AME) “spent $10 million in liquidation fees in the March 2022 quarter, as there had been virtually none for a year or two prior. Who was paid ?
  • “As of the March 31, 2022 AME financial update, (the) NCUA estimated the total remaining AME surplus at $846 million. It was five months ago. There’s still $451 million left from the March projections. Why does (the) NCUA continue to slow foot distributions two years after the end of the NGN program? »
  • “No financial updates or other estimates were provided. For example, in March the projected Southwest surplus dividend was $127 million, so why was only $82 million returned? now ? “

“The lack of public discussion at the board level or by any other agency personnel responsible for managing these assets is disappointing,” Filson wrote in an email to CU time. “This is a far cry from the public transparency and timely accountability that the agency is hoped to demonstrate in its cooperative regulatory role in managing member funds.”

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