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NCUA: TCCUSF Estimates Down $2.3B
WASHINGTON (11/25/13)--The upper end of remaining Temporary Corporate Credit Union Stabilization Fund assessment estimates declined by $2.3 billion between December 2012 and July 2013, thanks to a $1.6 billion decrease in expected costs and a $700 million assessment that was collected in October 2013, the National Credit Union Administration announced Friday.

"A great deal of disciplined work and careful planning has kept the Corporate Resolution on-track, and the new estimates are very good news," NCUA Chairman Debbie Matz said. "Our continued recoveries from Wall Street firms responsible for the corporate crisis, now totaling more than $1.75 billion, an improving economy and NCUA's continuing efforts to effectively manage losses are helping reduce future credit union assessments."

The estimates do not include funds from a $1.4 billion settlement that was reached with JP Morgan last week. (See Nov. 20 News Now: NCUA Receives $1.4B In JP Morgan Settlement.)

The agency reported that total future remaining TCCUSF assessments will likely be no higher than $1.6 billion. At the end of 2012, the projected range was $1.6 billion to $3.9 billion, the agency said. There will be no TCCUSF assessment in 2014, and Credit Union National Association Chief Economist Bill Hampel discussed what this news means for credit unions last week. (See Nov. 22 News Now: Inside Exchange Breaks Down NCUA Assessment News.)

"Factoring in both these latest reductions in loss estimates with an estimate of the net proceeds of the JP Morgan settlement, the current assessment range is now between minus $1 billion and plus half a billion dollars." Hampel said. A negative assessment implies a future rebate, he noted. "That means credit unions are more likely to see rebates than more assessment in the future, although the rebates will likely only occur several years in the future," Hampel said.

"The narrower range of projected remaining assessments reflects the actual performance of the failed corporate credit unions' legacy assets to date and NCUA's updated evaluation of the macroeconomic factors used in projecting the future performance of [NCUA Guaranteed Notes]," the agency said.

The NCUA noted that credit unions have paid $4.8 billion in assessments since 2009. "Although the Stabilization Fund will expire in 2021, assessments may end sooner," the agency said in a release.

The range of remaining assessments could be influenced by:
  • Changes in housing prices;
  • Interest rate changes;
  • Unemployment rate variations; and
  • Mortgage prepayments.
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