Banking

NCUA to distribute $865 million to resolve corporate credit union failures

The National Credit Union Administration will distribuite $865.5 million to 1,800 credit unions to resolve the failure of three corporate credit unions in the wake of the financial crisis.

The regulator will also end its Guaranteed Notes program and will continue to liquidate the program’s remaining assets and make further distributions when possible, it said in a Monday press release.

The NCUA had previously made two other rounds of distributions to resolve failed corporate credit union accounts within the past year.

“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,” said NCUA Chairman Todd Harper in the release. “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.”

The third distribution affects membership capital account holders of the former Members United, Southwest Corporate and U.S. Central corporate credit unions. The payment is scheduled to occur before the end of September.

The first distribution was made in July 2020 to the former capital holders of Southwest Corporate. The second payment was made this April to the former capital holders of Southwest Corporate, Members United and U.S. Central.

“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,” Harper said in the release.

With the third distribution, the NCUA will have returned more than $1.3 billion to former membership capital account holders.

The program was established by the NCUA to stabilize, resolve and reform the corporate credit union system in the wake of the 2008 financial crisis.



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