February 12, 2014

NCUA says reduced chance of future stabilization assessments

NCUA said Wednesday that it's "much less likely" now that credit unions will ever face another corporate stabilization assessment, pegging remaining estimated costs in a negative range – a development that NAFCU believes should lead to a rebate in 2021 once the stabilization program terminates.

NCUA said the net remaining stabilization assessment range, now, is estimated from negative $1.9 billion to negative $400 million. It said net proceeds from the $1.4 billion JPMorgan Chase settlement in November and the continued improvement in the performance of the legacy assets underlying the NCUA Guaranteed Notes program in the third quarter led to the decline in the assessment range.

NAFCU President and CEO Dan Berger urged the agency in November to cease stabilization assessments. NAFCU supports NCUA's efforts to recover costs through litigation, but it is also encouraging the agency consider a rebate in the future to insured credit unions. No assessment is expected in 2014.

NCUA must still repay $2.9 billion in outstanding Treasury borrowings before any remaining stabilization fund distributions can be legally made to credit unions. As a result, any potential repayment to credit unions is not likely to occur prior to expiration of the Temporary Corporate Credit Union Stabilization Fund in 2021.