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CUNA Paper: NCUA Faces 3 Issues When Winding Down CRP
Friday, February 10, 2017 6:50 AM

CUNA published a white paper Thursday examining 3 policy decisions the NCUA will need to make concerning the wind-down of the agency’s Corporate Resolution Program. CUNA, the leagues, and member credit unions will analyze the issues over the coming months and provide recommendations to the NCUA.

The NCUA and Congress established the Temporary Corporate Credit Union Stabilization Fund (TCCUSIF) as interim funding after five corporate credit unions became insolvent during the financial crisis. The obligations of the five corporates were funded by borrowing against the legacy assets in the form of NCUA Guaranteed Notes (NGNs), borrowing from Treasury, and collecting stabilization assessments from all federally insured credit unions.  

The Treasury borrowing has been repaid, and the Stabilization Fund has built a positive net position. The total cost of the resolution is now projected to be between $5.5 billion and $7 billion, less than half the original estimates. Assessments were suspended after 2013, having amounted to $4.8 billion.

With these assessments and $5.6 billion in depleted capital from the five corporates (a combined $10.4 billion), credit unions have overpaid the now-projected final costs of the resolution by between $3.4 billion and $4.9 billion. Current projections show that between half and two thirds of the $4.8 billion of assessments will be rebated through the National Credit Union Share Insurance Fund, and between 15 percent and 30 percent of the $5.6 billion in depleted capital will be replenished.  

Assessment rebates could begin this year. Capital replenishment won’t occur until 2020 or 2021.

As the Corporate Resolution Program winds down, NCUA will need to make three important policy decisions:

  • It appears advantageous to merge the National Credit Union Share Insurance Fund and the TCCUSIF this year and begin the process of assessment rebates in the form of an insurance fund dividend. There are risks and ramifications to this strategy, which CUNA will evaluate;
  • Even if the funds are not merged this year, the prospect of a considerable capital infusion into the share insurance fund in the next few years from the merger with the TCCUSIF means that a share insurance premium this year is not necessary; and 
  • As the stabilization program winds down in 2020 and 2021, there will be important decisions on how to be dispose of the remainder of the legacy assets, and NCUA and credit unions will need to conduct a dialogue on the best course of action.

Credit unions that wish to have their views included in CUNA and Cornerstone League analysis should email