CUNA letter to the NCUA regarding the Temporary Corporate Credit Union Stabilization Fund
WASHINGTON, DC (November 4, 2016) — The Honorable Rick Metsger Chairman
National Credit Union Administration 1775 Duke Street
Alexandria, VA 22314
The Honorable J. Mark McWatters Board Member
National Credit Union Administration 1775 Duke Street
Alexandria, VA 22314
Dear Chairman Metsger and Board Member McWatters:
CUNA appreciates the information NCUA has recently disclosed regarding developments pertaining to the Corporate Credit Union Stabilization Fund, and also welcomes the improving financial condition of the Fund and the implications for sizeable refunds to credit unions of assessments and depleted capital. While we are aware of the constraints the Agency faces in making refund payments to credit unions, we have previously stated the view that those payments should be made as soon as possible.
We understand that the primary constraint on the timing of refunds is that the vast majority of NCUA Guaranteed Notes (NGNs) do not mature until 2020 and 2021, and the securities collateralizing those NGNs cannot be sold until the NGNs mature, and the payment of refunds to credit unions requires the sale of those securities. Another consideration is the fact that the realizable value of the securities tends to rise with the passage of time.
Nevertheless, a significant portion of the NGNs will mature in 2017, representing initial NGN issue balances of about $3 billion. In a recent NCUA Report, published on July 19, 2016, the following statement appears: “NCUA plans to engage stakeholders before implementing any large-scale plans that materially affect the timing and amount of potential refunds to federally insured credit unions.” Whereas the author of that statement may have had the 2021 termination of the fund in mind, we believe that the release of potentially $3 billion of securities next year requires a large-scale event.
CUNA believes the maturing of a significant amount of NGNs in 2017 creates a welcome opportunity for the Stabilization Fund to make the first of several repayments to credit unions. We therefore request that NCUA announce and establish a process to engage with credit unions, state leagues and CUNA regarding the disposition of available assets in 2017, with the goal of providing refunds to assessment payers and/or former capital holders as soon as possible, and in the maximum amounts possible.
We appreciate your consideration of this matter.
Sincerely,
Jim Nussle
President and CEO
About CUNA
Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 135 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit cuna.org. To find your nearest credit union, visit YourMoneyFurther.com.
