Where’s The Rest of Credit Union Members’ $1.2 Billion?

In early January following NCUA’s posting of the September 30, 2021 AME financials for the five corporates, I published an analysis of the forecasted amount to be paid to credit unions.

That analysis showed NCUA projected total distributions of $3.185 billion to shareholders of four of the five estates.  The $569 million in additional payouts NCUA announced on February 28 brings actual payments to $2.010 billion.

Even with  these latest payments, there is still $1.2 billion due to credit union members based on NCUA’s financial projections.

The portion that NCUA announced as dividends on February 28 will go to the former Southwest Corporate shareholders.  They already received their entire capital contribution and are projected to be paid a $330 million liquidating dividend.   After this initial “dividend,” they will be due $120 million more.

Questions Abound


The NGN program ended in June 2021.   Why has it taking so long to return the remaining $1.2 billion balance to credit unions?   Will NCUA post a list of the remaining legacy assets and their current market  value with its December 2021 AME financial statements?

The five spread sheets of every legacy asset updated through September 2017 for each estate are already completed.  Shouldn’t NCUA now update these and publish the current market value for every remaining asset?

Is it fair to conclude that 12 years after the 2010 liquidation of the five corporates, only one was actually insolvent?   The other four were deemed insolvent because they were victims of exaggerated and inaccurate loss provisions projected decades into the future?

At this time NCUA forecasts total cash recoveries over $5.7 billion. Of this amount $2.6 billion was the TCCUSF surplus merged into the NCUSIF on October 1, 2017.

Is it correct to say this cash surplus occurred only after the agency subtracted $3.6 billion in liquidation expenses as reported in section B 1 Liquidation Expense in the AME financials?  Are these expenses approximately the same amount as the net legal recoveries?

The so-called legacy assets seized in 2010 have never changed.  Is it reasonable to suggest that this regulatory modeling miss-estimate of $6 to $8 billion was how NCUA determined the corporates to be insolvent?  Moreover, the vast majority of the projected credit defaults had not occurred when the corporates were seized.

If these erroneous projections of at least the $5.7 billion cash surpluses are reasonable, does this suggest why a look back at the entire event should be undertaken?  How can such misleading estimates be avoided in the future?

The Critical Work Still to be Done


NCUA’s errors in models and their assumptions resulted in irreversible damage for the credit union system and the individuals involved.   It continues still today in the diminished role of the corporate network.

While many might say let bygones be gone, the processes and powers that created this regulatory debacle have not been assessed or even changed.

The real work of the Corporate Resolution Plan remains to be completed.   Paying out the recoveries from events that should have never taken place should not be the end.  Rather it should compel a thorough look at what caused these errors and miscalculations in the first place.

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