NCUA to Distribute $76 Million From Corporate System Resolution Program
It’s the seventh time the agency has used the program to return funds after the failure of five corporate credit unions.
The NCUA announced Monday that it will be distributing $76 million to paid-in capital shareholders of the former U.S. Central corporate credit union, which was liquidated in 2010 after its failure during the Great Recession.
As the liquidating agency, the payment marked the seventh time the NCUA has used funds from the Corporate System Resolution Program, which was created by the NCUA board to stabilize, resolve and reform the corporate credit union following the economic collapse of five corporate credit unions after the 2008 financial crisis.
“This distribution represents the latest example of the NCUA staff’s highly successful efforts to resolve the corporate crisis and return funds to capital holders,” NCUA Chairman Todd Harper said. “With this distribution, like the others before it, the NCUA encourages recipients to use these funds to increase access to safe, fair and affordable financial products and services, especially in under-resourced communities. Credit unions can also use these funds to assist members experiencing economic hardship.”
According to the NCUA, the agency previously distributed money from the program in 2020, 2021, 2022 and earlier this year to capital holders of Southwest, Members United, Constitution and U.S. Central.
The NCUA stated this new distribution “is scheduled to occur before the end of September 2023.” Once the distribution is made, the NCUA said it will have returned $2.8 billion to former membership and paid-in capital shareholders.
In June of this year, 63 of Iowa’s 75 credit unions sued the NCUA for $4.2 million in recovered assets following the liquidation of U.S. Central. Joining in the filing of the lawsuit was the Iowa Credit Union League, its foundation, political action committee and an employee benefits company. The $1.3 billion Cobalt Credit Union in Papillion, Neb., and the $1 billion Marine Credit Union in La Crosse, Wis., were also listed as plaintiffs.
These credit union organizations were capital members of Iowa Corporate Central Credit Union (ICCCU) and U.S. Central provided services to ICCCU.
The lawsuit, filed in U.S. District Court in Kansas City, Kan., alleged the NCUA wrongfully denied payment of ICCCU’s claim receipt and wrongfully denied the credit unions’ and other organizations’ individual claims because when the ICCCU ceased to exist the remaining assets became the property of the member credit unions and other organizations.