NCUA to Distribute $865M Recovered From Failed Corporate CUs
Total distributions now total $1.3 billion from three of the five corporate credit unions that failed in the Great Recession.
The NCUA on Monday said it will distribute $865.5 million to the 1,800 credit unions that were members of three corporate credit unions that failed during the Great Recession.
The distribution to members of Members United, Southwest and U.S. Central Corporate Credit Unions is scheduled to be completed by Sept. 30, and will bring their total distributions to $1.4 million over the past year:
- U.S. Central members received $150 million in April and will receive $710 million by Sept. 30.
- Members United members received $126 million in April and will receive $229 million by Sept. 30.
- Southwest members received $172 million in July 2020 and $92 million in April, and will receive $140 million by Sept. 30.
The NCUA brought suit against major banks that participated in the sale of residential mortgage-backed securities that were a major contributor to the financial crisis and the failure of the three corporate credit unions plus two others: WesCorp and Constitution.
As of March 31, the NCUA has collected $5.1 billion from the lawsuits for a net recovery of $3.8 billion after legal fees and other expenses. The biggest contributors were J.P. Morgan ($1.4 billion), RBS ($1.1 billion) Bank of America ($165 million) and Goldman Sachs ($575 million).
The NCUA also announced Monday it has ended its NCUA Guaranteed Notes program and will continue to liquidate the remaining post-securitized assets and make further distributions when possible.
“This third round of distributions is the largest to date and another milestone in the NCUA’s successful management of the Corporate System Resolution Program,” NCUA Chair Todd M. Harper said. “As we wind down the remaining corporate credit union asset management estates, the NCUA will continue to conduct an orderly liquidation of the remaining assets and aggressively pursue legal recoveries while optimizing returns.
“Credit unions receiving money from these distributions are encouraged to use the funds to support serving the millions of credit union members experiencing economic hardships because of the COVID-19 pandemic, especially to people of color and those in low-income areas disproportionately affected by the pandemic.”
The Corporate System Resolution Program was established by the NCUA board to stabilize, resolve and reform the corporate credit union system in the wake of the 2008 financial crisis. The program allowed the credit union system to absorb the failures of U.S. Central, WesCorp, Southwest, Members United and Constitution corporate credit unions over time.