$1 billion to close out Stabilization Fund’s borrowings
Oct. 18, 2016 -- The $1 billion owed to Treasury to cover the costs of resolving corporate credt unions will be repaid by Oct. 31, NCUA announced Tuesday, closing out the Temporary Corporate Credit Union Stabilization Fund’s (TCCUSF) outstanding borrowings – but federally insured credit unions shouldn’t immediately expect a rebate of their assessments to the fund, the agency also made clear.
The $1 billion is the final portion of the funds the agency borrowed from Treasury to resolve corporate credit unions. Since 2009, according to the “Borrowing Cost” page on the agency’s website, NCUA has borrowed $11.2 billion from Treasury, and paid back $10.2 billion (as of June 25). The Oct. 31 payment will close out the amount borrowed to date.
In a statement, NCUA Board Chairman Rick Metsger called the billion-dollar repayment “historic.” “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,” his statement read.
However, the agency also explained that – even though the TCCUSF’s outstanding borrowings from Treasury will be fully repaid at the end of the month -- no funds will be available to provide federally insured credit unions with an “immediate rebate” of stabilization fund assessments. “Additionally, no funds are available for any recoveries by investors with claims for depleted capital of the failed corporate credit unions,” the agency advised. “NCUA must first satisfy any outstanding senior obligations of the Stabilization Fund and corporate credit union asset management estates.”
Additionally, NCUA stated that its $6 billion borrowing line with Treasury remains available to “satisfy future agency contingent funding needs, including obligations of the NCUA Guaranteed Notes Program.”
The agency also stated that it would provide additional information “in the near future” related to the timing of potential rebates and capital recoveries. “Possible rebates or recoveries are based on projections that can change over time,” the agency stated in its release. “Projected values of the Stabilization Fund and the corporate credit union asset management estates may not be realized until 2021. Future changes in the economy or the performance of the legacy assets that secure the NCUA Guaranteed Notes could change their value.”