When Will NCUA Give Back to Credit Unions their $1.0 Billion Dollars?

The following quotes show NCUA’s changing assessments of the collective obligation of credit unions (via NCUSIF) to U.S. Central Corporate Federal Credit Union. These statements lead to a critical question: when will credit unions get their money back?January 28, 2009, Letter to Credit Unions (09-CU-02) RE: Corporate Credit Union System Strategy

The expense of the actions will be passed on proportionately to all federally-insured credit unions through a partial write-off of your existing 1 percent NCUSIF deposit, as well as the assessment of a premium, sufficient to return the NCUSIF’s equity ratio to 1.30 percent … The impact on credit unions for the capital infusion to U.S. Central will be an average additional decline in the return on assets of 14 basis points and 13 basis points of net worth.

March 23, 2009, Webinar RE: Conservatorship of U.S. Central and WesCorp

“… [The] bottom line, when all is said and done, we have credit losses in these two institutions that far out exceed their capital. That’s the number one most important issue.” Dave Marquis, Executive Director“…when we post the balance sheets for the March period,…it will reflect that the paid-in capital and the membership capital accounts are all gone and absorbed and impaired…” Dave Marquis, Executive Director“We think we, at least in the current economic market where it is right now, we think we have the number about as close as you get in using professional judgment and a level of due diligence that we went a couple of steps beyond what we normally would have done in a normal conservatorship or something of that nature.” Dave Marquis, Executive Director

May 20, 2009, House Financial Services Subcommittee Meeting, RE: H.R. 2351, the Corporate Credit Union Stabilization Fund Act

Rep. Hensarling (R-TX): What are the actual losses incurred to date [5/20] on the securities of these two corporate credit unions?Chairman Fryzel: The actual number, Congressman, is actually a moving number … With our best calculation, and this is why we asked for the amount of $5.9 billion, that is our best estimate of what we’re going to have to deal with. Now there could be a lower or higher estimate and that could fluctuate over time. But that is what we’re looking at right now.

June 11, 2009, Board Action Memorandum RE: Temporary Corporate Credit Union Stabilization Fund

“The assignment of the NCUSIF’s Capital Note to the Stabilization Fund will result in the NCUSIF recognizing a recovery of the $1 billion expense and thus increase the NCUSIF’s equity by $1 billion. The amount of impairment of the Capital Note reflected on the Stabilization Fund’s financial statement, if any, will be determined by staff after a review of its recoverability and the applicable accounting guidance.”

On January 28th, credit unions were directed to write the capital note off.  Five months later the NCUA doesn’t even know if there is any impairment! U.S. Central has published data showing it is solvent. The capital note is not impaired. When will credit unions get their $1.0 billion back?