The NCUA will repay the U.S. Treasury the $1 billion outstanding balance on the agency's borrowing line by Oct. 31, NCUA officials announced Oct. 18.
With that payment, the Temporary Corporate Credit Union Stabilization Fund's outstanding borrowings from the U.S. Treasury will be fully repaid. The NCUA's $6 billion borrowing line remains available to satisfy any contingency funding needs in the future, including obligations of the NCUA Guaranteed Notes Program.
“The success of the corporate resolution program is a testament to the hard work and perseverance of our entire team, and I extend my deep personal gratitude to all of them for making this possible,” NCUA Board Chairman Rick Metsger said.
Agency officials said, however, that no funds will be available to provide federally insured credit unions with an immediate rebate of Stabilization Fund assessments. In addition, no funds are available for recoveries by investors with claims against the depleted capital of the failed corporate credit unions.
The NCUA said it must satisfy any senior obligations of the fund and corporate credit union asset management estates.
The potential for rebates or recoveries can change over time and the projected values of the Stabilization Fund and the corporate credit union asset management estates may not be realized until 2021, NCUA officials said.
The NCUA was the first financial regulator to recover losses from investments in securities on behalf of failed financial institutions.
The agency used the net proceeds from settlements to repay the stabilization fund's outstanding borrowings from the U.S. Treasury and to decrease the amount that surviving credit unions must pay to recoup the losses of the corporate credit union system.
“This is another good sign about the improving condition of the corporate stabilization fund,” CUNA Chief Policy Officer Bill Hampel said.
He said the repayment is a further indication that credit unions may receive a partial refund of assessments and restoration of depleted capital in the conserved corporates.
“NAFCU will continue to urge the agency to be fully transparent in how and when the funds will be refunded to credit unions,” President/CEO B. Dan Berger said.
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