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NCUA has announced it will be distributing $865.5 million to the 1,800 membership capital account holders of the former Members United, Southwest Corporate, and U.S. Central corporate credit unions.

ALEXANDRIA, Va.–NCUA has announced it will be distributing $865.5 million to the 1,800 membership capital account holders of the former Members United, Southwest Corporate, and U.S. Central corporate credit unions.

NCUA placed those corporates (plus Constitution Corporate and Wescorp) into conservatorship more than a decade ago as the result of failed investments in mortgage-backed securities that plummeted in value with the housing crisis.

The agency also announced the end of the NCUA Guaranteed Notes program and said it “will continue to effectuate its plan to orderly liquidate the remaining post-securitized assets” and make further distributions when possible.

“This third round of distributions is the largest to date and another milestone in the NCUA’s successful management of the Corporate System Resolution Program,” said NCUA Chairman Todd M. Harper. “As we wind down the remaining corporate credit union asset management estates, the NCUA will continue to conduct an orderly liquidation of the remaining assets and aggressively pursue legal recoveries while optimizing returns.

“Credit unions receiving money from these distributions are encouraged to use the funds to support serving the millions of credit union members experiencing economic hardships because of the COVID-19 pandemic, especially to people of color and those in low-income areas disproportionately affected by the pandemic,” Harper added.

Two Earlier Rounds

As CUToday.info has reported, as liquidating agent of the former corporate credit unions’ asset management estates, NCUA has to date previously made two rounds of distributions. The first distribution was made to the former capital holders of Southwest Corporate in July 2020. The second distribution was made to the former capital holders of Southwest Corporate, Members United, and U.S. Central in April of this year.

According to NCUA, these former capital holders will also receive the latest round of distributions, scheduled to occur before the end of September 2021. With this third distribution, the NCUA said it will have returned more than $1.3 billion to former membership capital account holders.

The agency called its Corporate System Resolution Program a “landmark initiative established by the NCUA Board to stabilize, resolve, and reform the corporate credit union system in the wake of the 2008 financial crisis.”

Additional Coverage

CUToday.info has just completed a five-part series examining the Corporate Resolution Program. Coverage can be found here:
A Decade Later, Series Examines The Decisions Made
Agency Performed, But A Few 'Black Eyes'
NCUA's Fazio Recalls Corporate Crisis Resolution
Former NCUA Chair Reflects on Corporate Resolution
No Clean Hands When it Comes To Failures

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