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Upper End of Projected Loss Range for Failed Corporates Continues Decline
Wednesday, March 19, 2014 7:00 AM

Total projected assessments associated with the Temporary Corporate Credit Union Stabilization Fund declined $2.2 billion at the upper end between July and December 2013, the National Credit Union Administration announced yesterday, the sharp drop due largely to the JPMorgan Chase settlement in November 2013.

The current projected range for total future remaining assessments is now between negative $2 billion and negative $600 million. At the end of the second quarter of 2013, the total range was negative $200 million to $1.6 billion. The overall rate of change in the assessment range is consistent with recent trends, and the continued improvement in the performance of the legacy assets underlying the NCUA Guaranteed Note program.

“The more than $1.75 billion in recoveries from NCUA’s litigation has certainly brought relief to credit unions, but it’s also good to see the general trends continuing,” NCUA Board Chairman Debbie Matz said. “An improving economy and NCUA’s continuing efforts to effectively manage losses from the corporate failures at this time make us hopeful that we will not need to make future credit union assessments.”

NCUA’s Board announced at its November 2013 meeting there would be no planned Stabilization Fund assessment in 2014. As long as both ends of the projected range of net remaining assessments remain negative, there will likely be no need for future assessments.

Since the Stabilization Fund was created in 2009, credit unions have paid $4.8 billion in assessments.

The agency currently has $2.9 billion in outstanding borrowings from the U.S. Treasury related to the corporate credit union resolution. The Stabilization Fund will expire in 2021.

NCUA released the new projections as part of the online semi-annual update of the costs of the Corporate System Resolution and the performance of the NCUA Guaranteed Notes Program

Interested parties can access Questions and Answers, a document containing the latest information about costs incurred to date and projected future assessment ranges over the life of the Stabilization Fund.

To promote transparency, the NCUA says it will continue providing periodic updates on the estimates about the losses associated with the Corporate System Resolution, the performance of the NCUA Guaranteed Notes, and the total anticipated assessments that credit unions will pay during the life of the Stabilization Fund, all of which can vary over time.