NCUA EYES $1B CORPORATE
CHARGE FOR 2012 ASSESSMENT
ALEXANDRIA, Va.-The NCUA Board is expected to vote a corporate assessment next month of between 8 basis points and 11 bps, or between $800 million and $1.05 billion, according to a top agency official.
This year's assessment is being calculated using the updated loss assessments for each of the five failed corporate, minus recoveries coming from lawsuits and the sale of assets, said Larry Fazio, deputy director for NCUA.
If the charge is approved next month it will be assessed for the third quarter, as it was the last two years, when federally insured credit unions paid a total of $3.3 billion to fund the corporate resolution.
NCUA says the loss projections for the five failures are little changed since mid-year 2010 when the agency was preparing to take over the last three corporate failures. That is, the ultimate loss estimate for WesCorp FCU is still around $7 billion; for U.S. Central FCU around $5 billion; Members United Corporate FCU $1.4 billion; Southwest Corporate FCU $1.2 billion; and Constitution Corporate FCU $200,000. Fazio said he expects an audited report for the Corporate Stabilization Fund expected to be completed in the coming weeks to show loss estimates.
The total losses for the five failures are projected at between $16.4 billion and $20.7 billion, with $5.6 billion of that the credit union-owned capital that was erased in the failures. That would leave between $5.2 billion and $9.5 billion to be funded by credit unions through corporate assessments.
NCUA is still negotiating with several Wall Street banks for their sale of mortgage-backed securities to the five corporates and pursuing settlements with monoline bond insurers over their coverage of failed bonds held by the corporates, said Fazio. Another suit against Wall Street banks is still be reviewed, he said.
To date, the only significant recoveries have been the payments of $145 million by Deutsche Bank; $20.5 million by Citigroup and $5.25 million from HSBC for their sale of MBS to the failed corporate. Proceeds from the sale of various corporate assets, like the U.S. Central's payments system to CO-OP Financial and buildings and technology were too small to make a difference in the final costs, according to Fazio.
Fazio also said the details of civil settlements with three senior WesCorp executives will remain confidential and will not be shared with the public.
CONSENT DECREE ENDS 1ST
FEW ADA-RELATED LAWSUITS
PITTSBURGH-Century Heritage FCU, one of 19 local institutions sued by a legally blind consumer over the ATM provisions of the Americans with Disabilities Act, has agreed to upgrade its ATMs over the next three months to provide adequate access to the blind in exchange for dismissal of a class action suit.
Under the terms of the June 6 deal, the $130 million credit union has agreed to perform the necessary work to upgrade its ATMs within 90 days and to have a representative of the plaintiff in the suit, Robert Jahoda, certify the machines are in compliance with the provisions of the ADA, including that they are speech enabled and have tactile (raised) controls for touch and Braille instructions for initiating the speech mode. It is unclear how many ATMs the credit union owns but it operates three branches around Pittsburgh.
Century Heritage is one of 19 credit unions and banks, including USX FCU, that were sued by Jahoda in the weeks since the March 15 final implementation deadline for provisions of the disabilities law. The terms of the consent decree are similar to settlements Jahoda has reached in recent weeks with 1st National Community Bank, Charleroi Federal Savings Bank and Fidelity Bank.
Jahoda, who is legally blind, said he has somebody help him around to the different ATMs and will continue to monitor area machines to ensure they are ADA-compliant. The non-compliance, claims Jahoda, "threatens blind people with the loss of their private banking information. Blind people who wish to use certain of Defendant's ATMs have no choice but to repeatedly reveal their private PINs to others to complete an ATM banking transaction."
Officials at the credit union did not return a phone call seeking comment and the terms of the settlement bar them from discussing the case publicly.
REGULATORS SHUTTER 4 BANKS;
28 FAILURES SO FAR THIS YEAR
WASHINGTON-The FDIC closed four more banks last week, bringing the number of failures to 28 so far this year.
There have been ten credit union failures so far in 2012.
Friday's bank failures were: $535 million Waccamaw Bank in Whiteville, N.C.; $43 million Farmers and Traders State Bank in Shabbona, Ill.; $54 million Carolina Federal Savings Bank in Charleston, S.C.; and $46 million First Capital Bank in Kingfisher, Okla.
Regulators estimate that the four bank failures will cost the FDIC insurance fund $80.8 million.
The FDIC lined up other lenders to assume the deposits and some of the assets of each bank.
HearingsHouse Financial Services Committee: "Mortgage Disclosures: How Do We Cut Red Tape for Consumers and Small Business?" on June 20.eventsNCUA Board Meeting, Alexandria, Va., June 21CFPB Comments on Impacts of Overdraft Programs on Consumers due June 29NCUA Listening Session, San Diego, Calif., July 10meetingscomment