By the end of October, the National Credit Union Administration will have fully repaid all monies borrowed from the federal government to cover the corporate credit union meltdown in the wake of the financial crisis more than eight years ago.
"This marks an historic moment for both NCUA and the entire credit union system," NCUA Board Chairman Rick Metsger said in a statement. "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."
About $1 billion in outstanding balance remains owed to the U.S. Treasury, according to NCUA, an amount the regulator said it expects to be fully repaid by Oct. 31. While those funds will have been paid back, NCUA's $6 billion borrowing line with the Treasury is still available to cover future funding needs, including the NCUA Guaranteed Notes Program.
The two national credit union trade associations released statements praising NCUA for how it dealt with the corporate credit union crisis and the aftermath.
"This milestone is a testament to the safety and soundness of the credit union industry," said Dan Berger, president and CEO of the National Association of Federal Credit Unions. But, added Berger, NAFCU "will continue to urge the agency to be fully transparent in how and when the funds will be refunded to credit unions" and will "remain vigilant in ensuring that NCUA manages the fund in a way that is most beneficial to credit unions."
Bill Hampel, an economist and chief policy officer at the Credit Union National Association, said the repayment announcement is yet another indication that the Corporate Stabilization Fund is continuing to improve. Repayment, added Hampel, "restores NCUA's full Treasury borrowing capability for future use, and it's a further indication that credit unions can look forward to partial refunds of assessments and some restoration of depleted capital in the conserved corporates."
But NCUA was quick to point out that credit unions shouldn't expect assessment refunds anytime soon.
"While Treasury borrowings will be repaid, no funds will be available to provide federally insured credit unions with an immediate rebate of Stabilization Fund assessments," NCUA said in its statement. Any rebates issued to credit unions are based on projects that change over time, NCUA added, noting that projected values of the Stabilization Fund and corporate asset management estates may not be realized until 2021, and changes to the economy and performance of legacy assets securing the NCUA Guaranteed Notes could impact their value.